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Loans You Can Pay Back Monthly
The benefits of bad credit loans with monthly payments are numerous. I will refer to this type of loan as an installment loan which is the most common term for them because they are repaid in installments.
Payments can range quite a bit and will be determined by many things. Your lender will base your payment schedule on, among other things, how much you borrow, your income and your credit.
Installment Loan Benefits
The main benefit to an installment loan over a payday loan is the time that you have to pay it back. The ability to stretch out the repayment over several months is priceless. It can drastically reduce the total of individual payments.
One of the chief reasons that people get trapped in payday loans is the fact that they have to pay it all back in one lump sum, principal and fees. For someone who is already cash strapped, this is a disaster. It means that they will be once again short on the paycheck used to pay back the loan. Because they are short, what happens, they have to take out another payday loan or they extend the loan and pay an additional set of fees.
Most people who take out a payday loan will take out another one in short order or continually roll their loans over. In fact, the average payday loan borrower will be in debt for five months out of the year and will pay more in fees than the amount that they actually borrowed.
With installment loans, the monthly payment is more likely to be something that the consumer can actually afford and fit into heir budget.
Another benefit to a monthly installment loan is the ability to borrow more money. Loans are not capped like payday loans are. You can, in fact, request a quote for a loan of up to $50,000 on this website. Payday loans are typically for amounts of $200 to $1000 with some states capping the allowable amount at a much lower level. In addition, many states ban the use of payday loans completely so they may not even be an option to you.
Installment Loan Drawbacks
There is a flip side to every coin and installment loans are not without their drawbacks.
The main drawback to an installment loan is that the interest continues throughout the length of the loan. This is obvious but what it means is that, while your interest rate may be lower than a payday loan, you may pay more in interest. Paying interest, even at a lower rate, for a longer term can often add up to more money.
Another thing that you have to consider is origination fees. Many loans will have them and you need to consider them and add them up in the total cost of the loan. An origination fee is a fee charged by a lender at the beginning of a loan to process it.
Finally, you often have the problem of your eyes being bigger than your wallet. More money is potentially available with an installment loan and a lender might approve you for more than you can actually afford. You should use caution to take out just as much as you need and not more.
When you get your loan quote, take the monthly payment and fit it into your budget. Make sure that it fits and leaves you money for your other expenses.
Questions To Ask
Before accepting your loan, there are questions that you need to find the answer to. If there is anything that you are unsure of about your loan details, you should contact your lender so that they can clarify it for you.
- Can I afford the loan?
With bad credit loans, monthly payments must be considered. Do not go into a loan expecting the payment to be easy. Money will not just appear in your bank account, you can either afford it or not afford it.
If you do not have a budget already, get one. Nothing complicated, just write down all of your expenses for a month. Then, fit the additional monthly loan payment into it and see if it works. Do you have enough left to pay your other bills? Is it going to be tight? If you realistically can not afford the loan, do not take it. - Is the cost worth it?
Look at the total cost of the loan provided by your lender. This is the amount that you will pay if you carry the loan out to completion and make al of the monthly payments.
Is the cost of credit worth it? If, for example, you borrow $2000 for a vacation but will end up paying $4000 back, you have to really consider whether that is worth it. These are the hard decisions you need to make to have a strong financial outlook. - Do I have other options?
Consider other sources of money before committing to a loan. Can you borrow from friends, family or even your own 401K? Can you sell something or just make other budget cuts to get the money? There are many of ways to get money besides a loan. - Can I get a better rate?
At Loan Monkey, we are not direct lenders. Your lender will set your rate and will base it on your credit and other factors such as your income and the amount that you are borrowing. If you do not like the loan rate, you could contact your lender directly to see if there is any room for improvement. - Can I get by without a loan?
If you have bad credit, loans are really only a good option if you must have the money. Ask yourself what would happen if you did not have the money and let that decision guide you.
If you can wait on a loan, you can use the amount of the monthly payment that you would have had and use it to improve your credit. Pay down balanced, make your bills on time and your credit will rise. - Can I improve my credit?
If you came here looking for “bad credit loans monthly payments” then you obviously have some work to do on your credit. These can be costly loans but you might be able to lower the cost a bit if you make some credit improvements.
Credit can be greatly improved by lowering your revolving credit balances, making timely payments on bills and disputing any errors. If you have time to wait, perhaps it would be best to work on your credit before getting a loan.
