The world of lending has changed dramatically over the past few years. Some lenders have become increasingly reticent to take on more risk by lending to people of dubious credit worthiness. The Collateralized Debt Obligation crisis which precipitated the recession caught even financial experts by surprise. The result was that many financial institutions were damaged and had to begin rebuilding their asset bases. They became more cautious as a consequence.
New Financial Environment
A further consequence is that the types and range of loans have also been changing and new types of long term loans are being devised to meet current demand. That demand has led to a new breed of lender that accepts a risk but will charge a higher interest rate for approving loan applications. There is profit to made from this higher risk sector. Many people with a poor credit score had previously managed their finances well before the recession struck. There is no reason to think they cannot do so again now that the US Economy has improved and general employment opportunities have increased.
One very common type of loan is the long term installment loan. This type of loan can be used for business, pleasure and even personal use. This is a quick way to obtain finance and even for those who have bad credit it is still possible to get approval for this type of a loan. It is important to know the difference between each type of loan.
Deciding Budget Before Borrowing Funds
The definition of a long term installment loan is one that it is fixed with an equal number of payments throughout the term. You can discuss with the lender the period over which you want to make repayments and they will tell you what the monthly repayment will be. Of course it is important to mention that the longer the repayment period the more interest you will have to pay. However the real benefit of such a loan is that the repayment amount can be put into your budget, the plan that you should prepare and follow so that your financial affairs are in order.
Interest Rates and Terms
When speaking about long term loans in installments the maturity date will usually be three to five years. The interest rate on a long term cash loan is going to be much higher than that on a short term loan. You should also understand that the better your credit history and credit score, the better interest rate you will receive. Usually the higher your credit score is, the lower the interest rate you will receive from the lender.
The requirements for obtaining an installment loan are minimal. Even if you have had bad credit or have been forced to file for bankruptcy there is still a chance that you can receive a loan. The main requirements are that you be employed with a good source of income, have a permanent residence and telephone number. Some lenders may even require that you have a bank account that is in good standing so that you can have your payment automatically withdrawn every month.
Improve your Credit Score – A Long Term Vision
A real advantage to installments loans is that if you have bad credit you can use an installment loan to help improve your credit history and credit score. By working with a lender that reports to the credit bureaus you will find that as long as you make your payments on time every month, you will see your credit score improve. Once the loan is paid in full your credit score will go up dramatically. The next loan you will receive may well be at a lower interest rate and consequently cheaper. The important thing is to be sure that the lender you are using reports to the credit bureaus.
Personal loans are given by the bank on credit, based on your word to repay. Typically good credit ratings (FICO > 719) are required, but personal loans are a good way to consolidate debt without giving any kind of collateral.
The Union Credit Union is a natural person credit union chartered to serve union members. A national advocate for unions and union members, it is headquartered in Spokane, Washington.
In 1968 members of Bricklayers Local 3 founded The Union Credit Union as a not-for-profit means of obtaining loans and saving money. Originally the credit union...
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