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Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.
Right now, it’s easier than ever before to get an online loan with monthly payments. But with that ease, comes the obligation to responsibly and within your limits. If you’re looking for a monthly loan online, it’s important to understand just what it means to take out a loan and what to watch out for. In the guide below, we’ll explore the ins and outs of online loans with monthly payments so that you can borrow responsibly.
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Simply put, an installment loan is a loan with scheduled monthly payments. There are many options for monthly installment loans from various companies and online lenders. It can be confusing as to what kind of loan is being offered, however. Different companies and lenders refer to online loans with monthly payments lots of different ways including, but not limited to:
At the end of the day, though, if you can apply for the loan online and it offers month-to-month repayment, your looking at the right kind of loan.
Repayment amounts are usually tailored according to what you can afford to pay back each month and the repayment term is adjusted accordingly.
In addition to being a way to access funds, loans with monthly payments provide some additional benefits to borrowers:
Personalized Amounts and Repayments – Personal installment loans allow you access to larger loan amounts if you need more money (depending on where you live and your net income). You will also have the option to choose your repayment period and the amount that you repay every month in most cases. The repayment period you chose, loan size, and interest rate will all determine your monthly payments.
Improves Your Credit Score – Another benefit of monthly loans is the ability to build your credit over time. When you make consistent monthly payments on your personal installment loan, you demonstrate positive credit behavior and your credit score improves. When lenders consider a candidate interested in anything ranging from personal installment loans to instant personal loans (for bad credit), they equate higher credit scores with higher-quality borrowers.
There are many online monthly installment loan options available. Below are our top picks:
|Lender||Best For||Minimum Credit Score|
|Stilt||personal loans with monthly payments for immigrants||None|
|Avant||personal loans with monthly payments||580|
|SoFi||personal loans with monthly payments||680|
|CashUSA.com||bad credit loans with monthly payments||Bad Credit|
|BadCreditLoans.com||bad credit loans with monthly payments||Bad Credit|
|Citizens Bank||long-term personal loans with monthly payments||Undisclosed|
|PNC||long-term personal loans with monthly payments||680|
Stilt considers a wholistic range of features when considering personal loan lenders, including, but not limited to: accessible customer service, reporting of payments to credit bureaus and financial education, flexible payment options, related fees, soft credit checks, and transparency of loan rates and terms. We also review consider the complaints filed with agencies like the Consumer Financial Protection Bureau. Stilt is not compensated in any way for our reviews and recommendations.
When you want to take out a loan, some lenders may require a cosigner. A cosigner is someone who agrees to take on your debt responsibilities if you fail to make your monthly payments. Lenders sometimes require a cosigner for unsecured loans to provide additional security and lower their risk.
A cosigner is not necessarily a requirement for an online personal loan, but it will depend on your financial circumstances and the lender. Usually, companies shy away from providing unsecured loans without a cosigner. The reason is that these companies believe the risk of non-payment is too big if they don’t have the additional security to fall back on.
For more info on cosigners, The Balance has a great article you can read here.
Credit ratings usually range from 300 to 850. Depending on your financial history, the score can be lower or higher. So, when is it bad?
According to credit reporting agency Experian, a bad credit score is any score below 669. A more specific breakdown of bad credit looks like this:
It’s worth mentioning that online loans for bad credit with monthly payments can seem like a quick way to get funds when you’re in a tight situation. But due to the predatory nature of some bad credit loans, patience and due diligence in research are very important.
As mentioned throughout this article, you may be looking for an online loan because you have an emergency. And if you’re feeling pressure to get money quickly, the promise of a fast online loan with a monthly payment may seem like the answer you’re looking for. We encourage you to explore and understand all of your options, especially if you have an emergency or a bad credit score.
Learn more about bad credit loans here.
CreditKarma says that there’s no “official” rule for what constitutes a long term loan, but says that “but, in general, personal loans with repayment terms of 60 to 84 months (five to seven years) are considered long term.” Essentially, a long-term unsecured loan is any loan with a term that is five years or longer. These loans tend to be for larger amounts and offer lower monthly payments.
Before we dive into the difference between paying your monthly installment repayments over a short term or long term, it’s important to remember it will be based on affordability.
The monthly repayment of your personal installment loan needs to be an amount you can afford to pay back consistently. When you miss monthly repayments because you cannot pay a certain amount or pay for a certain length of time, your chances of getting a loan in the future (even short-term loans) will decrease.
Higher Payments Over a Shorter Term – This means you choose to settle your personal installment loan debt by paying high monthly amounts over a short term. Even though you won’t feel the devastating effects of long-term interest with this option, the huge breaks in your budget could cripple your cash flow. Remember: defaulting on these monthly loan repayments will damage your credit score.
Lower Payments Over a Longer Term – In this case, you choose to pay back the online installment loan over a longer period so you can pay a lower monthly amount. This is a great option if your budget only allows for a smaller repayment amount. Be aware though, even though the repayment amount is lower, you will pay more total interest over the longer term than the option above.
This higher amount of interest paid over time especially becomes a burden if you borrowed more money than you actually needed. When you borrow the exact amounts you need instead of excess, you’re applying the affordability mindset mentioned above.
In the end, you will have to weigh the total amount of interest you pay against what you can afford to do. Whichever option you choose, make sure you can keep up consistent monthly repayments!
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