Installment Loans FAQ (2024)

FAQs

Can you be denied an installment loan? ›

Yes, it is possible to be denied an installment loan if you don't meet the requirements for approval. Some common reasons for being denied include having a low credit score, not having enough income to pay the loan back, having a lot of existing debt, or submitting an incomplete application.

If you have too much debt it will affect the “amounts owed” portion of your credit score, which makes up 30 percent of a FICO credit score. For instance, if you already have a mortgage, student loans, an auto loan and credit card debt, adding an installment loan may increase your debt-to-income (DTI) ratio.

Examples of installment loans include auto loans, mortgage loans, personal loans, and student loans. The advantages of installment loans include flexible terms and lower interest rates. The disadvantages of installment loans include the risk of default and loss of collateral.

An installment loan allows you to borrow money and pay it back in installments. As you make payments, your loan balance goes down until it reaches zero. You can find installment loans with no credit check offered by online lenders.

Use Collateral To Secure The Loan

If your credit score is lower than you need it to be, you could consider a secured loan. The inclusion of collateral makes secured loans easier to get approved for, as it assures the lender they'll get their money back one way or another – even if you default on the loan.

If you pay off the personal loan earlier than your loan term, your credit report will reflect a shorter account lifetime. Your credit history length accounts for 15% of your FICO score and is calculated as the average age of all of your accounts.

The loan will also appear as an open credit account, and if you miss a payment, it will remain on your report for up to seven years.

Decrease in the CIBIL Score

The most obvious impact is a decrease in the borrower's credit score. Missing even one instalment can lead to a drop in the score by 50 to 70 points. Most lenders look for a high credit score of around 750, so getting a loan in the future will be difficult.

An installment loan makes sense if you can afford the payment, are financially stable enough to repay it and get some sort of financial benefit from it. Installment loans require a payment commitment that can last as long as 30 years.

What is the easiest loan to get approved for? The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory due to outrageously high interest rates and fees.

What is a hardship loan? ›

Hardship personal loans are a type of personal loan that is designed to help you overcome financial difficulties. This type of loan is generally offered by small banks and credit unions, and has lower interest rates, lower maximum loan amounts, and shorter repayment periods than standard personal loans.

A Personal Unsecured Installment Loan provides you access to the money you need without using your property as collateral. You receive funds in one lump sum and pay it off through monthly payments over a fixed term of your choosing.

Why the IRS Rejects Installment Agreement Requests. The IRS typically rejects an installment agreement request for one of three reasons. If the IRS determines that your living expenses do not fall under the category of “necessary,” your agreement will more than likely be rejected.

Some reasons why an application could be refused, include: your income is not enough to repay the amount you wish to borrow. you don't have a sufficient deposit. you have a poor credit history because you missed repayments or didn't pay off another loan.

Your Job Status

There is a very high chance that your loan application will be rejected if you don't work in any of these jobs. Another case is that the bank was made aware of a sudden job change after completing your paperwork. The bank may reject your pre-approved loan on those grounds.