Over 10 million Americans apply for installment loans every year. Such loans are perhaps the best way to cover financial emergencies but people often get confused about installment loans or what they mean. This is why they often end up choosing the wrong issuer.
To help you understand exactly what you should be looking out for, we’ve gone ahead and answered all questions that you may have including, what are pre-approved installment loans and how to find the best pre-approved loans online.
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Pre-approved installment loans or pre-approved personal loans are a kind of ‘instantly approved’ loans usually offered to people with a good credit history.
However, a large number of lenders now also offer installment loans to people with poor credit scores. Loan preapproval refers to a lender reviewing your financial situation to determine what you qualify for. This helps save time. Also, as the name suggests, they’re paid back in installments.
The process involves a ‘soft-check’ that is performed to see your eligibility and credit history. A soft check does not impact one’s credit score and is a safe option.
Depending on your credit score and your monthly income, the amount for an installment loan may range from $5,000 to $50,000.
In such types of loans, the lender provides the borrower with a fixed payment schedule as well as fixed APR rates.
Such loans require minimal documentation and are usually approved in a day and funded in 24-48 hours. In fact, you can even apply for pre-approved installment loans online.
Here are some of the reasons why you may need a pre approved installment loan:
They’re a great option for people looking for urgent cash. These loans are usually approved in a day with some lenders even offering same-day funding.
With pre-approved installment loans, your credibility has been approved by the lender, and so they are more likely to provide flexible repayment terms that can range from 1 to 4 years.
However, you must discuss this with your chosen lender before finalizing the loan to avoid being a defaulter on your loan repayment.
The biggest benefit of installment loans is the ease that they offer. The money is repaid over a period of time with a set number of scheduled payments, thus putting less pressure on the borrower.
Installment loans are great because they come with fewer limitations. They can be used to cover a variety of expenses including education, home remodeling, a vacation or even bill payment. However, this may change from lender to lender so make sure to discuss this factor to be sure.
There are plenty of trustworthy lenders offering pre-approved installment loans online. We have covered some of the most popular options below:
Founded in 2007, LendingClub has built a solid reputation and has helped over 2.5 million people. LendingClub gives borrowers the option to perform a ‘soft credit pull’, which allows them to check their creditworthiness and pre approval eligibility without affecting their credit score.
Borrowers can have a loan amount ranging from $1,000 to $40,000. The range is very impressive, which makes this a great company for all kinds of lenders. Also, the minimum loan amount is the same for all states, however, the maximum may differ.
Additionally, LendingClub loans have an APR that ranges between 6.34 percent to 35.89 percent. However, the average rate offered to borrowers is 15.95 percent, making LendingClub out of the most inexpensive options out there. Again, the APR offered by the firm depends on factors such as your credit score and financial standing. Borrowers at LendingClub are given a loan term between 3 to 5 years.
There are no prepayment penalties, but LendingClub does charge a one-time origination fee, which is usually between 3 to 6 percent of the total loan amount that is being provided to the borrower.
The set origination fee depends on the borrower’s credit score and is taken out from the total loan amount at the time of funding.
In case of late payment, borrowers are charged a 5 percent late fee, or $15. On the plus side, borrowers have a 15-day grace period to make payments. Another great feature is the ability to change your payment date.
Here are the pros and cons of choosing LendingClub:
Pros
Cons
LendingClub is a great option but it may not be suitable for everyone as it has a minimum credit score requirement of 600.
SoFi offers loans all across America (except Mississippi) and is known for no-fee installment loans.
It is one of the best companies for people looking to apply for large loans as the maximum amount is $100,000 and the minimum is $5,000. This is one of SoFI’s USPs, however, we must mention that both the minimum and maximum loan amounts depend on the state that you’re in. For example, the minimum amount is only $10,000 in Arizona and $15,000 in Kentucky.
Keeping strict lending qualification requirements, SoFi is able to keep APRs low, between 6.99 percent and 22.8 percent for those using autopay.
Maximum APRs vary by state and could be lower in some cases.
Loan terms range from 24 to 84 months, with the option to pause payments for a period of 3 to 12 months, in case the borrower loses his job. This is a great feature and you should consider it if you are applying for a long-term loan.
There is no origination or late payment fee at SoFi, however, defaulters may be charged with higher interest rates. This is why we suggest that you never miss out on payments as doing so will also impact your credit score making it harder and costlier to apply for loans in the future.
Additionally, borrowers are not imposed with prepayment penalties, meaning they have the liberty to pay off their loans before the end of their term.
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Like most other preapproved installment loan providers online, SoFi does not perform a hard credit check until and unless the borrower approves the loan. Moreover, it allows borrowers to perform a soft credit check that does not affect their credit score.
Here are the pros and cons of choosing SoFi:
Pros
Cons
SoFi is one of the best options for people looking for a no-fee installment loan but it may not always be available as the company is known to be stringent and decline requests. You need a score of at least 680 to qualify.
Avant is an online loan lender for borrowers with middle income and a low credit score as the minimum appears to be 580.
The maximum loan amount is $35,000 and the minimum is $2,000, however, this changes from state to state. For example, the minimum in Massachusetts is $6,400. Moreover, the amount also depends on your credit history.
Avant offers installment loans with terms that range from 24 to 6o months. While opting for a longer repayment term may provide you with smaller amounts to repay every month, you might be charged with a higher APR, so be sure to weigh the options before making a decision.
The APRs advertised on Avant’s website range between 9.95 to 35.99 percent. The rate offered to you will depend on factors such as the amount and your credit score.
Avant charges what it calls an ‘administrative fee’ of about 4.75 percent. This amount is deducted from the loan that is credited to your account. This is a major con because few companies charge an administrative fee when issuing loans.Repayment defaulters have a window of 10 days before being charged with a late fee of $25.
Here are the pros and cons of choosing Avant:
Pros
Cons
Avant can be a great option as it comes with some great perks and is one of the few lenders online offering pre installment loans to people with low credit scores.
If you’re looking to consolidate your credit card debt then Best Egg can be a great option. It offers installment loans starting as low as $2,000 and going up to $3,500 with the option to request a larger amount (up to $50,000) if you have a good credit score. You are more likely to get approved for a larger amount if you have already had a loan with Best Egg that you paid on time.
Also, the minimum amount depends on the state you are in and can go as high as $6,500. Make sure to check these requirements before you apply for a pre approved installment loan online.
Best Egg believes that borrowers should be the masters of their own repayment terms and gives the option to choose from two plans: 36 months and 60 months. Pick what fits you more.
The company does well in another department as the APR is in the range of 5.99 to 35.99 percent. This makes it one of the most affordable companies offering installment loans, but there’s a caveat. The minimum credit score requirement is very high. You will need a score of at least 700 to qualify.
Best Egg charges an origination fee that ranges between 0.99 to 5.99 percent. The amount you pay will depend on your credit history, income, and loan term. We found that the company might be willing to negotiate a lower fee if you show a willingness to pay.
There is also a returned payment fee of $15 in case payments are retired due to insufficient funds. To avoid this fee, make sure to have enough funds to cover your installments.
Best Egg has carved a niche over the years and is known for being an easy lender to deal with. The entire process is online and applicants are usually processed in only a few minutes. The company performs soft checks and is safe to try.
Pros
Cons
Opt for Best Egg if you want flexible loan terms without a complicated process.
Pre-approved installment loans are easy to get. You only need to meet specific requirements that typically involve an active bank account, permanent US residence, a regular source of income, a decent credit score, and at least 18 years of age.
Pick from the options discussed above and make sure to only apply for a loan if you will be able to pay it back on time.
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