Installment loans can provide critical financial assistance for expenses when you have bad credit. With an installment loan, you borrow a lump sum of money repaid in equal monthly payments over a set period of time. They offer more predictable payments compared to other loan types.

In this comprehensive guide, we’ll cover everything you need to know about requesting installment loans online with bad credit through our network of lending partners. Please note that we are not a direct lender; we simply connect you with potential lenders who review your loan request, and approval is not guaranteed.

What Are Installment Loans?

Installment loans are a type of personal loan paid back in equal monthly installments over a fixed term. These loans provide access to a lump-sum amount that you repay in scheduled payments to the lender along with interest.

Installment loans can be secured or unsecured. Secured loans require collateral like a house or car that the lender can seize if you default. Unsecured installment loans don’t need collateral, making them more accessible.

Loan terms typically range from 3 months to 6 years. Shorter terms have higher monthly payments while longer terms have lower payments spread out over more months. Loan amounts start around $1,000 and can exceed $100,000 for some secured installment loans.

Installment loans are one of the most flexible loan types. Borrowers can use the funds for almost any purpose like:

  • Credit card or medical debt consolidation
  • Home improvements and repairs
  • Car repairs or purchases
  • Weddings, funerals, or family emergencies
  • Education expenses
  • Vacations
  • Starting or growing a small business

Monthly payments provide predictable budgeting and repayment discipline. Interest rates are also fixed for the full loan term on most installment loans.

Benefits of Installment Loans for Bad Credit

Installment loans offer several advantages for borrowers with poor credit scores:

1. Access to funds with bad credit

Lenders look at factors beyond just credit scores to approve bad credit installment loans. Income, debt levels, and credit history are also considered. Approval is possible even with prior bankruptcies or foreclosures. Please note that approval is not guaranteed and depends on your overall financial profile.

2. Fixed monthly payments

Installment loans have predictable, fixed monthly payments. This helps borrowers budget and plan their finances over the long term.

3. Multiple term length options

Terms typically range from 3 months to 6 years, giving borrowers flexibility. Longer terms mean lower monthly payments while shorter terms result in less interest paid overall.

4. Fast funding

Many online lenders fund approved loans within 24 hours. These loans provide quick access to funds for immediate financial relief.

5. Lower interest rates

Installment loans may offer lower interest rates compared to payday loans and credit card cash advances. Paying less interest saves money over the life of the loan.

6. Improve credit scores

Making on-time monthly payments builds a positive payment history and can improve your credit score over time, helping you qualify for better loan offers in the future.

7. Simple qualification

The loan request process is straightforward with minimal requirements. Approval decisions are made quickly, although approval is not guaranteed.

How Do Installment Loans Work?

Installment loans provide a one-time lump sum payment upfront that you repay in equal monthly installments. Here is the general installment loan process:

1. Submit your loan request online

Complete a short online loan request with your personal details and desired loan amount through our lending partners’ websites.

2. Get approved

The lender reviews your loan request, checking income, debts, credit history, and other details. Approval decisions are provided quickly, though approval is not guaranteed.

3. Accept loan offer

If approved, evaluate the loan offer terms including rates, fees, and repayment schedule. eSign loan documents to proceed.

4. Loan funding

The lender deposits the approved loan amount directly into your bank account as soon as the next business day after signing the agreement.

5. Make monthly payments

Equal monthly installment payments are automatically deducted from your bank account according to the repayment schedule.

6. Become debt-free

After making all required monthly payments, the loan is repaid in full with no remaining balance, helping you move toward a debt-free future.

The straightforward process makes installment loans easy to manage even with bad credit.

What Are the Requirements for an Installment Loan?

Installment loan requirements are minimal compared to mortgages or auto loans. Here are the typical eligibility standards:

  • Minimum age: At least 18 years old in most states and 19 in Nebraska and Alabama.
  • Income: Steady, verifiable income with monthly earnings. Full-time, part-time, self-employment, benefits, and retirement income may qualify. Minimum required income varies by lender.
  • Bank account: An active checking account to receive the loan funds and make scheduled payments.
  • Residency: Permanent U.S. resident and state resident. Proof of address is required.
  • Contact information: Valid phone number and email address.
  • Credit check: Installment lenders perform a soft credit check that does not affect your score. While there is no strict minimum score, higher scores typically secure better rates and terms.

As long as you meet these basic criteria, you can qualify for an installment loan even with bad credit or no credit history. The lender verifies your details and makes an approval decision based on your overall creditworthiness.

What Are Common Reasons for Denial?

While requirements are flexible, some situations result in a higher likelihood of denial:

  • Recent bankruptcy: Many lenders require at least 12 months since bankruptcy discharge before considering a loan request.
  • Foreclosure or short sale: Waiting a few years after a home foreclosure or short sale can improve your approval odds.
  • Outstanding loan defaults: Defaulted loans that were never resolved hurt your case. It is recommended to resolve them first.
  • High debt-to-income ratio: Excessive existing debt compared to your income can reduce approval chances until your debts decrease.
  • Unable to verify income: The lender needs to confirm your income through pay stubs, tax returns, or bank records.
  • Unemployment: A stable source of income is required for the lender to assess your repayment ability.
  • No checking account: A bank account is mandatory to receive loan funds and make scheduled payments.

Meeting these basic requirements gives you the best chance for installment loan approval. Addressing the common denial factors can further improve your prospects.

What Credit Score is Needed?

Many lenders do not set a strict minimum credit score requirement. They review your entire credit profile instead of relying solely on the score. Some may require scores as low as 550 to 600 for approval.

The higher your credit score, the better the loan offers will be. For example, excellent credit in the 700s can qualify for interest rates as low as 4% APR, while borrowers with poor credit in the 500s may face rates around 25% APR.

Selecting an online lender that considers multiple factors beyond just your credit score increases your approval odds for bad credit.

How Much Can You Borrow?

Loan amounts for installment loans typically range from $1,000 to $5,000 for a first loan, although some lenders may offer amounts up to $35,000 or more.

The amount you qualify for depends on factors such as:

  • Your income level and monthly expenses
  • Existing debt and overall credit profile
  • The lender’s underwriting criteria

For a larger loan amount beyond $5,000, lenders generally require stronger credit scores and higher incomes. Meeting the lender’s debt-to-income criteria improves your chances of approval.

Having an established relationship with the lender, such as a history of prior installment loans paid as agreed, can support approval for higher amounts.

What Are Typical Interest Rates and Terms?

Interest rates and terms on installment loans vary by lender. Generally, applicants with good credit may see rates ranging from 4% to 36% APR, while rates for borrowers with bad credit are usually between 25% and 36% APR.

Shorter repayment terms of 3 to 24 months result in higher monthly payments, whereas longer terms of 24 to 60 months lower the monthly burden but increase the total interest paid over time.

Online lenders often offer competitive rates due to lower overhead costs compared to traditional banks. It is important to compare offers from multiple lenders to find the best rate for your situation.

Consistently making on-time payments and maintaining healthy credit habits can help you qualify for lower rates on future loans.

Do Lenders Check Your Credit?

Most online installment lenders perform a soft credit check when you submit your loan request. Soft checks review your credit report details without affecting your credit score.

Hard credit checks, which may lower your score, are rarely needed except when applying for very large or secured installment loans.

Using soft checks allows you to request loans from multiple lenders without multiple negative impacts on your credit report.

Hard checks should be avoided unless you are fully committed to a specific loan, as they can harm your credit score if the application is denied.

Can You Get Approved with No Credit Check?

Some lenders advertise “no credit check” installment loans. However, reputable lenders review your credit information as part of the loan request process to assess repayment risk.

Avoid any lender claiming to offer loans without reviewing your credit, as responsible lending practices always include an evaluation of your credit profile.

Legitimate lenders provide access to funds for bad credit borrowers while ensuring that all applicants are properly evaluated.

What Fees Are Involved?

Typical fees for an installment loan include:

  • Origination fee: 1% to 6% of the loan amount, which is deducted from the disbursement to cover administrative costs.
  • Late payment fee: Approximately 5% to 10% of the monthly payment if it is not received by the due date. Some lenders may offer grace periods.
  • Returned payment fee: Between $10 to $30 when a scheduled monthly payment is returned due to insufficient funds.
  • Prepayment penalty: Some lenders charge this fee if you repay the full loan early, while others waive penalties for early repayment.

Always factor any fees into your total cost comparison when choosing between loan offers, and avoid lenders with exorbitant fees.

Can Lenders Seize Your Property if You Default?

Unsecured installment loans do not put your personal assets at risk if you default, as these loans are not backed by collateral.

However, lenders may pursue other debt collection methods, such as legal action or reporting defaults to credit bureaus. Your personal property remains protected in unsecured loans.

For secured installment loans, such as auto financing or home equity loans, the collateral (like a vehicle or house) may be repossessed if you default.

Unsecured online installment loans provide access to funds without risking your personal possessions in the event of repayment difficulties.

Tips for Requesting Bad Credit Installment Loans

Follow these tips when seeking installment loans with poor credit scores:

  • Check your credit reports – Ensure all information is accurate and dispute any errors to improve your score, as lenders rely on this data.
  • Avoid multiple new loan requests – Submitting too many requests in a short period can negatively impact your credit score and loan eligibility.
  • Document income and expenses – Keep pay stubs, tax documents, or bank records handy to prove your ability to manage repayments.
  • Explain past credit issues – Provide context for any past financial hardships, such as medical emergencies or divorce, if applicable.
  • Start with lower loan amounts – Requesting a smaller loan initially can increase your chances of approval and help build a positive repayment history.
  • Compare lender options – Evaluate loan terms, interest rates, fees, and overall reputation to select the most favorable option.

With careful preparation and by understanding the lender’s criteria, you can successfully secure the financing you need even with poor credit.

Pros and Cons of Online Installment Loans

Online installment loans offer unique advantages along with potential drawbacks to consider:

Pros

  • Quick approval decisions and funding, often within 24 hours
  • Accessible to borrowers with bad credit histories
  • Convenient application processes without the need to visit a bank branch
  • Competitive interest rates compared to payday loans or credit card cash advances
  • Fixed monthly payments that help with budgeting and financial planning

Cons

  • Higher interest rates compared to traditional bank personal loans
  • The ease of access and quick funding may lead to overborrowing
  • An online-only process might lack the personal touch of community banks
  • Missed payments can result in fees and negative impacts on your credit score
  • Some predatory lenders may exploit borrowers with hidden fees and unfavorable terms

Carefully weighing these pros and cons will help you determine if installment financing is the right solution for your financial needs.

Alternatives to Bad Credit Installment Loans

If you do not qualify for an installment loan, other financing options include:

  • Borrowing from family or friends – A low-cost option if personal relationships allow for flexible repayment terms.
  • 401(k) loans – Borrow against your retirement savings; typically lower interest rates but with limits on amounts.
  • Credit card cash advances – Fast access to funds, though usually at high interest rates.
  • Payday loans – Provide immediate funds before payday but often come with very high fees and interest rates.
  • Pawn shop loans – Loans secured by valuable items; approval is based on the collateral rather than credit history.
  • Secured loans – Use an asset, such as a vehicle title, as collateral to qualify for a loan.
  • Peer-to-peer lending – Borrow funds from individual investors, typically requiring a stronger credit profile for competitive rates.
  • Credit builder loans – A unique option that requires an upfront security deposit, which is gradually refunded as you make on-time payments.

Each alternative comes with its own advantages and challenges, so it is important to research and choose the option that best fits your financial situation.

Key Takeaways

  • Installment loans allow you to borrow a lump sum that is repaid in fixed monthly installments over a set term.
  • They provide access to funds for bad credit borrowers with more predictable budgeting compared to other loan types.
  • Lenders consider multiple factors such as income, debt levels, and credit history—not just your credit score—when reviewing your loan request.
  • Borrowers with poor credit typically face interest rates between 25% and 36% APR.
  • Loan amounts commonly range from $1,000 to $5,000, though higher amounts may be available with strong financial credentials.
  • Responsible borrowing and timely repayments are key to managing installment loans effectively and improving future credit opportunities.

Frequently Asked Questions

Q: What credit score is considered bad credit?

A: Credit scores below 630 are generally considered bad credit. Lenders often consider scores under 580 as very poor, though many installment lenders review the full credit profile and may approve borrowers with scores in the 550s or higher.

Q: How fast can you get installment loan funds?

A: Many online lenders transfer approved funds as soon as the next business day. Once you eSign the loan documents, the funds are typically deposited directly into your bank account.

Q: Where does the lender deposit the loan money?

A: The approved loan amount is deposited directly into your linked checking account via ACH transfer once the necessary paperwork is completed.

Q: When do monthly repayments start?

A: The first monthly installment is usually due 30 days after the loan funds are disbursed to your bank account, with subsequent payments following on a monthly basis.

Q: Can late payments ever be waived?

A: Late fees may be waived at the lender’s discretion under certain circumstances, but it is best to assume that fees will apply if a payment is missed. Communicate any financial hardship to your lender before the due date.

The Bottom Line

When faced with unexpected expenses, installment loans can provide bad credit borrowers with access to financing that might not be available through traditional channels. Just be sure to request only the amount you can realistically afford to repay based on your budget.

With prudent borrowing decisions and responsible repayment habits, installment loans can be a valuable tool in helping you regain financial stability.

Samuel Mitchell