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Online Installment Loans- Bad Credit

Installment loans are thought to be a lot safer than payday loans. Is this really true or are they just as risky for the borrowers?

installment loans can be renewed into new loans
installment loans can be renewed into new loans

Payday loans are probably the most popular type of short-term loans out there.

Even though there are many different opinions about them, there is always one certain thing – high risk. This fact by itself leads to the growth of another type of loan – installment loans that have the reputation of being a much safer choice.

However, lately, different researchers showed that this may not be the case or at least not fully the case. It turns out that there are some secrets in online installment loans that may pretty much change the way that borrowers look at them.

Some lending companies claim that installment loans for bad credit are better than payday loans due to the fact that they don’t include the final payment that can really make the borrower go over the edge, making him end up with even more debt. But that alone does not necessarily make them a safe service.

According to Lauren Saunders who is an attorney, working at the National Consumer Law Center, “There are installment loans that have very deceitful add-on fees, extravagant rates, and deceptive products, and tricks such as loan flipping, that make them just as, if not even more dangerous than payday loans.”

Installment loans, much like payday loans, don’t start off looking like they involve a big amount of money. There are also offered as installment loans with no credit checks. A lot of people who are financially vulnerable are easily attracted by what these short-term loans have to offer. Since information is essential when making any financial decision, we’ll uncover 5 secrets about installment loans to help you make better choices.

They are not a one-time solution

Installment loans have the reputation of being an easy, one-time fix to a financial difficulty. Reality is, much like payday loans, installment loans can be renewed into new loans over and over again. And lending companies providing installment loans tend to make their clients do that. A research showed that about 76% of the company’s loan volume consists of renewals of existing loans.

The annual percentage rate can go as high as 500%

annual percentage rate can go high
annual percentage rate can go high

A customer participating in an installment loans customer research had an APR of 110% listed on his contract. Even though this sounds bad, there are much worse cases out there. By renewing their loans over and over again, borrowers can end up paying incredibly big amounts in the interest rate. The repayments are structured in a way that in the early stages you pay more in interest. Meaning that refinancers keep on paying interest but without putting much of a dent in the principle which doesn’t really help with getting out of debt.

Add-on fees

Recently, federal regulators have broken down on some credit card companies which sell add-on products such as ‘credit protection’ plans. That being said, installment loans lending companies are still aggressively trying to sell these services to their clients.

Installment loans are growing

As an indirect result of the negative focus that the media puts on payday loans lending, more and more borrowers are turning to installment loans in times of financial difficulties.

Installment loans lenders use aggressive techniques to collect their money

Some lending companies are really aggressive
Some lending companies are really aggressive

Some lending companies are really aggressive when it comes to collecting their money. In some cases, they may even start calling you before your due date. If the repeated calls don’t do the trick, they may start calling you at your workplace or even start harassing your friends and family. If you refuse to answer these phone calls, installment loans collectors may show up at your home or your workplace to continue their threats.


All types of loans have their benefits and downsides. It is up to you to decide which option suits you the most, but one thing is for sure – the more information you have, the better you are able to make the right financial decisions.


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