Installment loans are any type of loan that borrowers pay off in scheduled payments, known as installments. Installment loans are the most common loan product and can range from short-term loans of $25 to loan amounts in the millions. As such, they can greatly vary in their interest rates, repayment schedules, and other loan terms.
Installment loans can be anything from mortgages and car title loans to boat loans and others. Many of these loans, however, are personal loans. Personal loans are loans that can be used for a variety of purposes instead of being used to finance one thing, like a mortgage for your home. Medical bills, unexpected expenses, and other financial needs can be paid for with personal loans. These loans tend to range from about $25 to a few hundred thousand dollars.
Installment loans are often seen as the industry standard for loans because of the way they are repaid. Paying off your loan in installments makes each payment predictable. Loans like payday loans and cash advances often have to be repaid in full in a week or two, which can make repaying them very difficult. Installment loans on the other hand are split up into many different payments that are more manageable.
Every payment is made at the same time of every pay period and you almost certainly know how much your loan payment will be. For example, if your loan agreement states you are paying your loan off in monthly installments, your payment will likely be due at the end of every month. This allows borrowers to be able to properly budget their loan payments and helps them make their payments consistently, which helps boost their credit score.
To get an installment loan, there are some eligibility requirements you must meet first. To be able to apply for any installment loan, you will need these things first:
Additionally, be prepared to have to provide some personal information so your loan provider can verify your identity. For example, your address, social security number, and credit history will likely need to be provided.
Make sure you are getting a loan from a trustworthy financial institution so your information doesn't fall into the wrong hands!
Installment loan rules vary from state to state. California residents getting an installment loan will likely have much different loan terms and regulations than someone from Texas might encounter. Compared to other states, California has more strict rules and regulations on loans, which are mainly meant to protect the borrower from predatory lending and unfair loan terms.
Within California however, there isn't much variety from city to city. Los Angeles installment loan rules will look mostly the same as San Diego's. Many of the installment loans rules in California apply to smaller consumer loans. One major piece of legislation enacted was the Fair Access to Credit Act passed by Governor Gavin Newsom.
This act prevents loan providers from exceeding an annual percentage rate (APR) of 36% on loans from $2,500 to $10,000. This act also prevents lenders from charging additional fees on these loans that would make the loan cost exceed 36% (administrative fees are still allowed). This act also places limitations on other loan terms. Consumer loans over $3,000 have a maximum loan term of 60 months and 15 days.
The California Constitution also denotes that "non-exempt lenders can charge a maximum of: 10% interest per year (.8333% per month) for money, goods or things used primarily for personal, family or household purposes." However, due to certain loopholes, many lenders like credit card lenders are able to circumvent these regulations.
Thanks to modern banking and lending, you no longer have to go into a physical store to get an installment loan in California. Various institutions like online banks, credit unions, and other online lenders allow borrowers to get online installment loans.
While you can still go into a physical store if you want to, you now have the option to get a loan from the comfort of your couch. You will, however, need to prove that you are a California resident. Let's take a look at the two ways to get installment loans in California.
Online installment loans allow customers to get a loan from their phone or computer wherever they may be. The process is usually fairly quick and you can get your loan approved and a loan amount in a few business days, or even the next business day with companies like Possible Finance.
To get a loan online, find an online lender, bank, or credit union that provides online loans. On your online application, you will fill out your important personal information like you would on any other loan. You will also need to show proof on your loan application that you are a California resident. (The requirement for this proof can vary from lender to lender.)
Once you fill out the application, the online lender may check your credit report and most likely your FICO score. If your application is accepted, the money will automatically be deposited into your bank account. Paying back your loan will also be done online, usually through automatic payments from your bank account.
Online loans tend to be for smaller loan amounts than those you could get at say, a bank. While the maximum loan amount varies from lender to lender, it will generally be smaller than if you were to go into a bank or credit union.
Online loans are both flexible and convenient and can be a great financial solution for the modern borrower.
In-person loans are the more traditional form of credit loans. Before the internet and online bank accounts, getting a loan in person was the only solution. Since many banks, credit unions, and other lenders require you to go in person to get their loans, you might find that this is your only option, especially for larger loans.
In-person loans tend to take longer to process than online loans but are typically more reputable than some online lenders.
Possible Finance is an online lender that offers small installment loans to individuals with no credit or bad credit in many states, including California. Possible offers loans of up to $250 in California that can be repaid in 4 installments over the course of a month.
Traditionally, loans like payday loans were some of the only loans available to people with bad credit. These loans are immensely expensive and require the borrower to pay back the loan in a week or two, which is the cause of many defaults. Even worse, even if you pay back your payday loan successfully your credit score likely won't budge.
Possible's loans are much easier to pay back. Our loans are repaid in installments, and if you are struggling to make a loan payment, you can extend your payment up to 29 days right within the app, at no charge at all.
Further, as you pay back a Possible loan on time, your payments are reported to TransUnion and Experian, two of the three credit bureaus, which could help increase your credit score.
Possible wants to help solve financial injustice, not be a part of the problem like many traditional payday lenders.
Live in California and are interested in a Possible Finance installment loan? Download the app today and get started!