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Long-term personal loans make it easy and affordable for consumers to fund essential needs. The extended repayment periods translate into lower monthly payments.
Personal loans are unsecured. They do not require collateral and rely on the borrower’s signature promise to pay. They also feature scheduled monthly payments of equal size – which fits the definition of an installment contract.
Therefore, unsecured long-term installment loans are personal loans – just with a different name.
However, people with bad credit and those seeking no credit check direct lenders online should dial back expectations. Expect to borrow less while paying higher interest and fees – if approved.
Long-Term Personal Loans
Long-term personal loans are just another name for installment contracts secured by the borrower’s signature. Personal loans are unsecured (rely on a signature promise to pay) and feature fixed interest rates and regular monthly payments, which include principal and interest.
It’s easy to get a personal loan. Be prepared to complete the online form by providing all the information required by the lender for approval. Here is the information you will need.
- Show sufficient income and verify employment
- Provide bank routing and account numbers
- Verify your identity
- Driver’s license number
- Social Security number
Long-term personal loans for borrowers with bad credit require scaled back expectations. A person with an adverse history appearing on his or her consumer report probably has a poor FICO score. Low ratings suggest that this person has a high risk of delinquency or default on the obligation.
If you can find an online lender willing to approve a long-term personal loan with bad credit, expect to feel one or more of these consequences.
- Require fewer monthly payments to retire the full principal. Extended time with the lender’s money adds to the uncertainty. Therefore, expect the finance company to limit exposure by cutting back on the term.
- Demonstrate a low debt-to-income ratio. You can make up for bad credit history by showing healthy income relative to the projected monthly payment. Borrowing an affordable amount helps your cause.
- Expect to pay higher fees and interest rates. Lenders need to compensate for the added risk by charging more to use their money. High origination fees allow finance companies to circumvent usury laws that cap interest rates at 35%.
Long-term personal loans are a popular way for entrepreneurs to finance a small business venture. As mentioned earlier, personal loans are installment contracts secured by a signature promise to repay the obligation on time and according to terms.
Small business owners can take out long-term personal loans based on their credit record. Borrowing on the owner’s profile is very common as many startup businesses have few assets and no income statements to offer as documentation.
Contrast this approach with the underwriting process for a long-term business loan through a bank. The banker may require two years on income and balance sheet information about the business. Also, many businesses secure the loan with equipment such as trucks, printers, etc. This approach does not work well for service businesses that do not rely on heavy equipment.
Long-Term Installment Loans
Long-term installment loans make the monthly payments more affordable and can help the borrower avoid spiraling into debt. Installment loans carry a fixed interest rate and require regular monthly payments, which include principal and interest. The principal balance equals zero at the end of the term if you make all payments on time.
Installment loans come in many flavors and lengths.
- Mortgages may have 15, 20, or 30-year terms. The value of the house secures the mortgage. Therefore, lenders can foreclose on the property if the borrower defaults on payment.
- Auto loans can last for 5 to 7 years. The value of the vehicle secures a car note. As a result, the lender can repossess the automobile in the event of default.
- Unsecured signature loans may have up to a 5-year term for the most qualified borrowers only. In this case, lenders must file a lawsuit to garnish wages in the event of default.
No Credit Check
Long-term installment loans without a credit check require the consumer to alter expectations. It is not realistic to expect approval when imposing these two parameters together. Also, no credit check companies operate differently than you think.
- Long-term might mean 12 months rather than five years. Unsecured loans pose a higher default risk to lenders. If your qualifications are less than perfect, expect the lender to limit the time you have to repay the principal. Uncertainty increases with time.
- No credit check lenders often use alternative sources of financial data. Second-tier bureaus house non-traditional data that also predict future delinquency. The company will log a hard inquiry with the alternative reporting agency. However, the inquiry will not appear on the files at Equifax, Experian, or TransUnion and will not affect your FICO score at these bureaus.
First-time borrowers often benefit most from these alternative data sources. The lenders might consider apartment rental, utility payment, checking, savings, or money market accounts, which suggest financial viability.
Long-term installment loans with no credit check through a direct lender bring your approval odds close to zero. You must identify and contact each direct lender individually and ask if they will approve your request without performing a traditional credit check.
A one-by-one approach is time-consuming and rarely yields success.
Unfortunately, most people find that direct lenders are brick and mortar banks or credit unions that cater to borrowers with top-notch qualifications only. Direct lenders shy away from consumers asking to borrow money without a credit check.
Online lenders cater to no credit check borrowers. However, they rarely operate direct. Instead, they rely on a network of brokers and lead consolidators to refer potential customers. However, getting your profile in front of an extensive network of finance companies with a single soft inquiry is a better approach anyway.
Payday Cash Advance
Long-term payday loans are unicorns. A cash advance installment contract with one payment tied to your employer’s payroll cycle is not long-lasting. Most employers cut payroll weekly or biweekly and sometimes monthly – but never longer.
Thinking of a payday loan as a long-term installment arrangement is a sure way to financial ruin. The online lender will impose an origination fee of at least $15 per $100 advanced – per payroll period. Rolling over a cash advance every two weeks means new origination fees added to the balance.
The origination fees add up quickly when you roll over a payday loan repeatedly. For example, the $100 cash advance balloons to $615 owed after only six months. Avoid this situation at all costs if you can.