Most lenders require the loan applicant to be employed when seeking a loan. Lenders are reluctant to lend money to unemployed applicants. The reason is simple. Unemployed persons are considered as high risk to the lenders. They will reject the loan applications from unemployed persons or charge a very high interest on loan. 

The trouble is the need for money is especially high when unemployed. For such individuals, installment loans offer the perfect solution to fulfill financial needs during the difficult times. Sums of about $5,000 are within reach of the loan applicants. However, there are certain conditions that must be considered when applying for installment loans.

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Installment Loans: What are they?

Installment loans are especially designed for the benefit of unemployed individuals. However, it can be obtained by anyone that is need of instant cash. The amount is borrowed to fulfill expenses until the individual finds a stable source of income.

The duration of the loan can be as little as 30 days or as long as 30 years. The installment loans can be obtained against IRA, 401(k), home, and other personal assets. A problem with withdrawing amounts from certain saving accounts is that in some cases it incurs a penalty. In certain cases, the amount is also taxed by the tax collection agency. So, obtaining installment loan is the best option in such a situation.

The lender is protected because the loan is offered against savings or a personal property. Moreover, the borrower is also expected to find an new source of income that increases the likelihood that the loan amount will be paid on time.

Pros and Cons of Installment Loans

The term installment loans is generally associated with consumer loans that is serviced locally and repaid over a specified period of time in installment. Mortgage, student, and car loans are some of the common examples of installment loans. These loans are generally considered safe and more ‘affordable’ as compared to credit card, payday and title loan.

However, a drawback with installment loans is that obtaining the loan involves a lot of paperwork and is a timely process.

What to Look For When Applying for Installment Loans?

You should carefully read the terms and conditions when applying for installment loans. The important factors that you must look for when applying for installment loans include fees and charges, duration of payment, and assets uses as collateral for the loan.

Note that longer duration loans have lower installment amounts. However, the net cost of the loan also increases with the increase in the loan duration. You can be able to secure lower rate on installment loans by improving your credit score or offering higher value collateral against the loan.

On a final note, installment loans are probably the cheapest, and in some cases the only option to obtain loans to fulfill financial requirements. The terms of conditions on installment loans are usually more lenient as compared to other types of loans such as payday and car title loans.

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