Financial history of loan applicants is vital for lenders, and it will be a mistake to think that they ignore it altogether. The credit score based on the financial history of loan applicants is important for lenders because it provides information and facts about the borrower’s financial standing that helps to judge their financial reliability. Therefore, it will not be right to assume that you can avail a no check credit installment loan that completely ignores your credit score.
Checking of credit score and credit history is part of the loan approval process, but it does not affect the eligibility of borrowers. Everyone who applies for installment loan will surely get it, but like everything else that comes at a cost, you must pay a cost for the loan in terms of the interest rate. The interest rate varies according to the credit score of borrowers with good credit scores equating with lower interest.
Different from credit card loan
You can avail easy loans with credit cards too, but the nature of the loan is entirely different from installment loans. By swiping your credit card, you can immediately access cash up to the approved credit limit, and it is as good as withdrawing your own money. Although you are borrowing the money, you need not apply for a loan because there is already a credit line in place that you are just making use of. Moreover, neither there is any fixed amount to pay every month, nor there is any fixed period for paying back the loan.
In the case of an installment loan, you must apply for it online and receive the money within 24 hours and make monthly payments for a fixed amount that includes principal and interest.
Fixed loan amount
Monthly repayments for installment loan are not the only fixed component of the loan because the loan amount also remains fixed. You apply for a certain amount of loan, get it and then make monthly payments for a fixed amount over a fixed period. In case of credit card loans, you can keep borrowing as long as you remain with the approved credit limit. It means that you can take multiple loans against one credit card and repeat it as many times you want provided you do not exceed the approved credit limit.
Fixed interest rate
The interest rate on installment loans remains fixed during the tenure of loan and worked out by considering the credit score of the borrower as well as the amount of loan and the repayment period. However, the interest payable on credit card loan can vary from time to time depending on several factors like delayed payment, missed payment, etc. A drop in your credit score can also result in higher payment.
If you can avail unsecured installment loans, it is a much better option than credit card loans because the effective payment of installment loans is lower than credit card loan. You can lower it even further if you have a good credit score and even if not, you can use installment loans to build a good credit history.