Installment loans allow borrowers to repay their loan over the course of multiple paydays. Unlike a traditional payday loan which requires full loan repayment in one lump sum, or open ended debt from credit cards, repayment of principal and interest for installment loans can be distributed anywhere from two paychecks for a small personal loan, up to thirty years for large mortgages. These flexible payment terms ease the burden associated with unplanned financial events.
Credit history does not have very much impact on loan eligibility for short term installment loans. Unlike traditional financing, short term loans typically do not require a credit check during loan application. Borrowers seeking short term installment financing need only a steady source of income and a verifiable bank account.
Short term installment loans are intended to offer immediate relief for budgetary stress, but are not a long term debt management solution. Allowing your loan to default will negatively impact your ability to obtain financing in the future. Because the loan can be repaid over the course of multiple pay periods, the US Department of Defense considers installment loans exempt from legislation which prevents military members from obtaining financing from predatory lenders.
While installment loans are generally considered a safe form of credit, be careful not to borrow more than you can afford to repay in a timely fashion. With short repayment terms, the effective APR of the loan will be higher. If the loan installments are spread out over longer periods of time, the loan APR is reduced, but you will likely end up paying more interest over the life of the loan.