Person looking at credit score online

Can I Get an Installment Loan with Bad Credit?

Even if you don't have the best credit score, you may still qualify for an installment loan. With an installment loan, you can take out a set amount of money at once and repay it over time via fixed payments.

To determine whether to approve you for an installment loan, some lenders will consider your available income and current debt, rather than solely your credit score or credit history. Let's dive deeper into installment loans for bad credit.

What is Considered Bad Credit?

Most credit scores range from 300 to 850. The higher your credit score is, the better your credit is and that can be viewed as a more responsible of a borrower you are. Here's a look at the common credit score ranges and their ratings.

Credit Score Rating
300-579 Very Poor
580-669 Fair
670-739 Good
740-799 Very Good
800-850 Exceptional

If your credit score is on the low side (typically in the Fair or Very Poor ranges), you may find it difficult to get approved for a personal loan. This is because lenders will likely view you as a risky borrower who may not repay a loan.

However, payday loans, installment loans, title loans, and lines of credit from Advance America will not disqualify based on your credit score alone. This option allows borrowers with bad credit to be eligible to apply and possibly earn loan approval when they need money most.

Loan options available for borrowers with bad credit

Comparing Installment Loans

Not all installment loans online are created equal - whether you have good credit, bad credit or poor credit. That's why it's important to compare the various options at your disposal. When you do so, pay attention to the following.

  • Rates

    The higher the interest rate is, the more the loan will cost over the life of the entire loan. Fortunately, Advance America offers small dollar installment loans for borrowers with various credit scores, whether bad credit, poor credit or good credit, featuring interest rates that can match your budget.

  • Terms

    A longer loan term means lower monthly payments. On the other hand, a shorter loan term can save you money on interest charges. If you opt for an installment loan from Advance America, you'll have anywhere from 3 to 36 months to pay it back (depending on the state and loan amount) and we will work with you to make sure the repayment schedule fits your budget.

  • Lender Reliability

    Some lenders are more reliable than others. So it's a good idea to do some research and read customer reviews to learn about which ones you can trust. Advance America has offered installment loans for poor credit since 1997 and earned the support of countless satisfied customers, along with an A+ rating from the Better Business Bureau. Using a direct lender like Advance America can also provide benefits to save you money and speed up your funding when compared against loan brokers or lead generators.

  • Fees

    In a perfect world, you'd make all your payments on time. Since this may not be realistic, you should familiarize yourself with any fees that lenders may charge for missed or late payments. Advance America's installment loans for borrowers many different credit ratings including bad credit, poor credit or good credit can include a flat fee or daily interest bearing loans.

Installment Loans vs. Payday Loans

While installment loans and payday loans are both options for people with various credit ratings - bad credit, poor credit or good credit, there are significant differences between them.

What They Are Borrowing Limits How Repayment Works

Installment Loans

Longer-term loans that allow you to borrow a set amount of money and repay it over time.

Up to $3,000 (depends on your state of residence).

You'll repay them over 3 to 36 months via fixed monthly payments.

Payday Loans

Short-term loans that help cover your expenses until you get your next paycheck.

Up to $1,000 depending on your state.

You'll pay them back typically within two to four weeks. This normally aligns with your pay dates.

Payday loans are often used for emergency expenses, so you can get quick cash and repay it within a few weeks. Installment loans allow you to finance larger expenses, like a new appliance or big home repair, by spreading out repayment over a timeline that meets your needs.

Installment Loan: Pros & Cons

As with all financial products, installment loans come with their own set of advantages and drawbacks including:

Pros

  • Flexible Repayment Terms: With an installment loan, you can choose a short- or long-term repayment period to meet your unique budget and preferences. Repayment terms typically range from 3 to 36 months. This loan term can also be dependent on the loan amount.
  • Higher Borrowing Limits: Compared to other types of loans which may only allow you to borrow a couple hundred dollars, an installment loan offers higher borrowing limits.
  • Fixed Monthly Payments: Since you'll pay back an installment loan through fixed monthly payments, you'll find it easy to budget for.

Cons

  • Potential Fees: Depending on the installment loan you choose, you may have to pay hefty fees for things like origination, prepayment, and late payments. Advance America, however, does not assess additional fees when you repay a loan early.
  • Potential High Interest: Your installment loan may have a high interest rate that makes it costly in the long run, when compared with a secured loan like a home equity loan.

What Can an Installment Loan Be Used For?

An installment loan is a versatile product that can be used for a number of common expenses including:

  • Home and Car Repairs

    Unfortunately, home and car repairs pop up when we least expect them to. An installment loan can help you out when you need new tires, have a leaky water heater, or need to replace your roof.

  • Medical Bills

    Even if you have health insurance, you may face an expensive medical bill at some point in time. With an installment loan, you can cover a surgery or medical procedure with ease.

  • Unexpected Expenses

    Maybe you have to pay for a loved one's funeral or perhaps you have to take care of a larger-than expected tax bill. Whatever your unexpected expense may be, an installment loan can be a quick solution, even if you don't have an excellent credit score.

How to Apply for An Installment Loan

Whether bad credit or good credit, anyone can apply for an installment loan. To apply for an installment loan, follow these steps.

1. Compare Option

Don't settle for the first installment loan you find. Do some research and compare your options. Choose the one that offers fast approvals, lenient credit requirements, a borrowing limit that meets your needs, a competitive interest rate, and the most favorable terms.

2. Prepare Documents

Before you apply for an installment loan, gather a driver's license or another type of government ID, banking details for direct deposit, your Social Security number, and recent proof of income.

3. Submit Application

Some lenders will only allow you to apply online while others will give you the option to apply in-person. Regardless, be sure to fill out the application thoroughly and accurately to avoid delays.

4. Receive Funding

Wait until you get approved for the installment loan and receive the funds. To collect them as soon as possible, sign up for direct deposit or apply directly at a nearby Advance America location.

5. Repay Loan

Be diligent and make every effort to repay your loan in full every month. You may want to enroll in automatic withdrawals or set up calendar reminders so you never miss a payment.

How to Improve Your Credit

Even though there are installment loans are available for consumers that have bad credit or good credit, it's wise to improve your credit before you borrow money. Improving your credit score can help you increase the amount you can borrow, while making approval for your loans and lines of credit even simpler. Here are some tips that can help you do just that.

  • Pay Your Bills on Time

    Pay your mortgage, rent, credit cards, car loans, and other bills on time every month. Even one missed payment can ding your credit so it's important to keep your bills top of mind. Consider automating your payments to make sure you don't miss any payments.

  • Keep Your Credit Balances Low

    Try to keep your credit balances to no more than 30% of the credit available to you. For example, if you have a credit card with a $5,000 limit, your balance should never be more than $1,500. By either paying down your debt or increasing your credit limits, you can improve this credit utilization ratio, which can help you increase your credit score.

  • Check Your Credit Reports

    Go to AnnualCreditReport.com to get copies of your credit reports from the three major bureaus: Experian, Equifax, and TransUnion. Take a close look at each report and dispute any errors or inaccuracies: fixing incorrect reporting can immediately boost your credit score. With your credit report in hand, you can also identify the reasons for a bad credit score to help you avoid that type of credit behavior going forward.

  • Don't Apply for New Accounts Too Often

    Every time you apply for a new line of credit, a hard inquiry shows up on your credit report and has the potential to lower your score temporarily. For this reason, don't apply for new credit unless you absolutely need to.

Fortunately, a perfect credit score is not required if you want to take out an installment loan. There are installment loans online for poor credit that can help you make it through any financial obstacle.

The above information is provided for informational use only. Advance America is not responsible for any loss or damage resulting from your reliance on the material provided. This information is accurate as of the time it is posted; but it may not be updated regularly, so it may not be current information depending on when you read it. You should consult with your own financial professional when making financial decisions.