Students have to deal with a multitude of things when studying in college. Not every student has the ability to pay for their college education without any use of student loans. A lot of them have to work part-time jobs to help them get through college.
This leaves them no time to study or even any money to fulfill their necessities. And on top of that, if they cannot pay their student loan installments, their credit history gets affected badly. This, in turn, makes it extremely difficult for students to get a loan via traditional lenders such as banks.
According to a survey conducted in 2018, 45% of students do not have money left over till the last week of the month and are barely living paycheck-to-paycheck. This leaves them no money for college books, a cafeteria, or even their basic necessities.
Luckily, installment loans are a boon for students with bad credit. This loan helps them cover all monthly costs, and they can even use these loans to pay back previous installments for the months that they were low on cash. In short, it’s easy to get guaranteed installment loans with bad credit for students who are unable to manage their finances properly and end up spending more.
Here are a few reasons why installment loans are beneficial for working students.
Installment Loans are Offered to People with a Bad Credit history
Unlike traditional bank loans, some installment loans are offered to people or even working students with a bad credit history. It is understandable that students either have no credit history or might rack up a bad one due to pending student loans or even delayed payment of credit card bills.
Most of the time, student loans are not enough to put a student through college. They have to work really hard to afford their tuition fee and college textbooks. Installment loans can be a great addition to the already existing student loans to help students get an extra financial backup for college.
Traditional banks require people to go through an extensive credit history check, which is needed to see whether they are eligible for the loan.
Students cannot get such loans because they cannot show a very high income and have no collateral to give to the bank.
Financial experts suggest that many can get guaranteed installment loans with bad credit history if they apply for one. This is quite an attractive feature for students with no credit scores as well.
Installment Loans Provide Higher Credit Limits than Credit Cards
Since the last ten years, many people have gotten into the horrific cycle of getting credit cards. They are issued a credit card based on a stable job.
But they end up spending extra money and are unable to pay it back. This keeps racking up and affects their credit score significantly.
You can actually borrow a lot more money with installment loans than you can get on credit through a card.
It is not feasible for students to spend money they do not have, only to rack up an insane credit card bill.
For bigger purchases such as expensive tuition books or paying a semester’s fee, one can easily take advantage of an installment loan.
Installment loans have a fixed interest rate
Installment loans offer safety and predictability. Most of these have a fixed rate of interest. That means the interest rate does not change after it has been decided. Or agreed upon by the lender and the borrower.
It’s no surprise that variable interest rates are quite unpredictable and can increase at any given time. Throughout a loan’s life, the total amount that is due remains the same for fixed-rate payments.
Installment loans can be applied for online
Traditional bank loans require applicants to go through a tedious process. They are required to go through an extensive credit check and visit the branch multiple times to get their loan approved. This is not a feasible option for students since they have to attend classes and work as well.
Installment loans offer the ease of online application. Students can easily apply for an installment loan during a five-minute break at work or even between their classes. All they need is an internet connection to be able to fill out the form. This is quite an attractive feature for students who can not find the time, even for themselves.
They offer a very easy application process
Traditional bank loans require a ton of documents from the applicant. They need the individual to have a stable job, a valid Social Security number, and most importantly, an excellent credit score.
Sometimes, even after meeting all these prerequisites, banks do not approve the loan. Online installment loans are easier to apply for. They only require the person to be at least 18 years of age, have a valid and active bank account, provide a Social Security number, and have a steady income.
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These loans are usually processed much faster than other forms of loans, which can be an important point for students who desperately need cash.
It barely takes five minutes to fill up a form to apply for an installment loan, which can be done from practically anywhere.
They do not require any Collateral
Most loans, such as home loans, require some form of collateral given by the applicant if they cannot pay the lender back. Installment loans do not require any collateral.
The borrower can very quickly pay back the amount in a given period based on fixed rates and payment schedules.
If they are unable to pay, the lender will most likely revise the schedule but will not use collateral.
The bottom line
The life of a student is quite hard. It’s not easy juggling between a job and studies along with worrying about your finances.
While it’s always good to manage your finances wisely, having an alternative present in times of cash crunches is like a breather for many.
For instance, installment loans offer students a way out and some temporary ease till they can get back on their feet.
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