My Blog

Unfortunately many borrowers do not understand what a term-based (installment) loan is. I hope that this article will help you to understand exactly what kind of loan product we are talking about here.

Installment loans by definition are loans which are paid over a term of months or years. This is a more conventional loan product as it takes into account typical yearly interest rates, AKA APR (annual percentage rate).


This is key because with a more conventional term-based loan you will pay much less interest that if you sign yourself up for a payday loan. A payday loan can bring upon a true APR, or EAR (effective annual rate) reaching as high as 350% to 500%! This is not acceptable.

The difficulty with finding any kind of loan when you have bad credit is compounded by the current state of the economy and the "credit crunch" we are seeing in the financial community, now causing lending institutions to dry up most of their personal financing flow - even for some good credit applicants.

Once you have made the wise decision to steer clear of a payday loan or cash advance, and follow-through with the goal of procuring a term-based loan, you need to find a lender that sees value in the cost of funding you would pay for over time.

When you are shopping for a term-based loan make sure you have a clear picture of your financial history and credit scores. Use one of the free credit score services available to find out what the three different credit reporting agencies have on your file.

Experian, Transunion, and Equifax are the three major credit reporting agencies and then there is your Fair Isaac score (FICO) and your Teletrack record. If you carry out your due diligence in this matter you will save yourself a lot of time and headache, and perhaps money because your cost of funding will be less due to a lower interest rate.

A problem you may have with a conventional lending institution or bank is that they often have a minimum lending amount for small personal loans of $5,000 (sometimes lower but never lower than $3000). So if you need a loan for only $1000 or $1500 your usually stuck in a situation of having to consider a payday loan or cash advance.

So you are looking for that fine middle road whereby you can get approved for a small $1000-$1500 quick loan which is pay back over time and your APR should not be any higher than 15%. The closing fees should be reasonable and there should be no surprise "balloon payments" or anything like that. Stay vigilant and watch out for predatory lenders as they can be very slippery if you don't pay attention.

There are some online lenders that do give bad credit installment loans for a reasonable closing fee and effective annual percentage rate. There actually isn't that many term-based lenders that give loans for under $3000 so you will have to engage in some research online and off-line.

Article Source:
http://www.bestmanagementarticles.com
http://business-loan.bestmanagementarticles.com
About the Author:
Terry Zulit is a professional writer and blogger who writes about personal financing products. You can read more about bad credit installment loans here.