When you’re in the market for installment loans, it can be challenging to navigate all the differences between all the companies and services they offer.
These are all important questions to ask when shopping for a loan of any sort, but the process is often overwhelming to an inexperienced borrower.
Because of that, we’ve put together this simple guide about the important things you need to consider when you’re choosing an installment loan provider. There are a host of red flags to watch out for, but by following this step-by-step guide, you’ll be able to successfully navigate the world of installment loans and find an option that is right for you.
The first thing you need to know about choosing installment loans is where your credit stands. While lenders offering installment loans are less concerned about your credit score than traditional lenders, it’s still an important part of the approval process. The better your credit, the higher the loan amount you could qualify for and the lower the interest rate.
Luckily, checking your credit score these days is easier than ever. Besides online services like Credit Karma and Credit Sesame, you’re legally entitled to one free credit check per year with the three major credit monitoring agencies: Equifax, TransUnion, and Experian. You can usually complete the entire process online and print your report in around ten minutes. It’s simple and painless and something you should check every once in a while anyway.
The second tip to getting a good deal on an installment loan is to do your due diligence and take the time to shop around for the best deal. A variety of brick-and-mortar companies and online vendors are willing to offer you a loan. As the consumer, the responsibility to shop around for the best deal on any product or service is ultimately up to you.
A few key things to be aware of when comparing loans: the credit score required, the income level you need to have, the number of payments, the total amount of the loan, and the interest rate.
Those 5 elements are key to knowing whether you’re getting the best deal possible. If you have the time and patience, you can even enter these variables for each company you’re looking at into a graph to compare them easily.
While the majority of installment loan companies out there are legitimate businesses, there are dishonest companies out there looking to make a quick buck by scamming people out of their money.
Spotting them isn’t hard once you know what to look for, but to the inexperienced, they can be a dangerous predator.
A scam loan company’s main objective is to get you to give them either your personal information or money before a legal loan agreement is signed.
To this end, scam companies often ask you to pay an application or processing fee before giving you a loan offer. Any legitimate loan company will never do this, as it’s a violation of federal law for a loan company to ask for payment before providing the loan funding.