What if you can’t repay your installment loan
By 1950, typical middle-class Americans had revolving credit accounts at different merchants. Maintaining several different cards and monthly payments was inconvenient which created a new opportunity. Diners Club introduces its charge card, allowing the consumer to use one card with many different merchants. This helped open the floodgates for other consumer credit products. BankAmericard, now called Visa followed in 1958 – the advent of revolving credit lines and credit cards.
Throughout time installment lending has been used as a tool by societies and companies to move products and services to support economic growth. Installment lending is used by consumers as a tool to help them acquire goods and services to improve their lives.
Life happens and sometimes you just can’t repay your loan on time. Expect inbound messages from your lender, increasing in severity over time. The main thing lenders are looking for is some type of engagement from you. Your lender is looking to work with you on repaying the loan – working proactively with your lender may reduce the severity of the messages as well as increase flexibility, reduce stress, and end in a better result.
If you’re not able to take action on your loan and repay some or all of what’s due, the lender may hand you off to a collection agency. The primary objection of a collection agency is to get you to pay off some or all of your loan. The good news is you ount than originally owned with the collection agency – the bad news is that the settlement will likely go on your credit report and hurt your credit score.
If there is collateral associated with the loan (such as with a mortgage or car), expect the lender to contact you about repossessing the collateral. Laws vary in each state so be sure to understand what will happen in each state and what the lender is required to do by law.
The impact of not paying back your installment loan can be very negative! Your credit score will be hurt, you may incur additional fees and interest, it’ll be harder to obtain loans in the future, there will be ongoing stress and anxiety, and some lenders even turn to criminal prosecution. Be aware of your rights and the laws in your state and if at all possible, don’t take out an installment loan if you don’t need it in the first place!
Final verdict on installment loans
Installment loans have been around a long time and is one of the most popular types of borrowing. Few people go through life without taking out an installment loan at least once.
Applications can vary significantly by lender and by the type of installment loan you get – be sure to do your research, plan ahead, and compare rates before going with a specific lender.
If you have bad or no credit and you’re looking for up to $500* in minutes**, check out Possible Finance. You’ll also have the opportunity to build credit history and improve your long-term financial health with an installment loan from Possible.
Authored by Scott: He loves all things talent or ranching. He has long been fascinated by the idea that “the Pen is Mightier than the Sword” and dreams of becoming a well-read author. Until then, he enjoys sharing short essays with others.
- History of installment loans
There are two main types of credit checks – a soft inquiry and a hard inquiry
- Student loan – A student loan is a type of loan designed to help students pay for school-related fees such as tuition, books, and living expenses with borrowed money. Student loans are offered by the federal government as well as private institutions and lenders such as banks, credit unions, and other companies. Some student loans are subsidized by the government to give borrowers a lower cost. In addition, interest payments on student loans are usually delayed until after the student graduates and finishes school. Most college students can qualify for student loans and the term and amount of the student loan is determined by education level and dependent status.
- If approved, e-sign the documents within the app and accept the loan.
- Revolving line of credit. Banks and financial institutions offer a revolving line of credit which has a certain amount of available credit for a set period of time or even an indeterminate amount of time. The amount of debt outstanding on the line of credit can be paid periodically and borrowed against once it is repaid. There is usually no requirement to pay off any amount of the principal but the interest must be paid on schedule. A credit card is one type of revolving line of credit but you can ask a bank or financial institution for a line of credit separately, especially since revolving line of credits are usually cheaper than having outstanding amounts on a credit card. However, line of credits can have other fees such as origination fees onedayloan.net/payday-loans-wa or usage fees.
Modern credit started with the advent of the automobile industry. An automobile was an extremely expensive commodity – it could cost you a half year to full year’s income. The most popular Auto brand was Ford. However, General Motors quickly took the prime popular position when they created the General Motors Acceptance Company, GMAC. With 35% down and monthly installments, you too could have a new car. By 1930 2/3rds of new cars were sold on installment.