Can Someone In Their 20s Get An Installment Loan?
If you are in your 20s and are considering applying for finance, you may be reluctant due to the belief that young people struggle to get accepted for loans.
This is not always the case though. Many market-leading lenders offer installment loans to young people.
We will examine why those in their 20s sometimes struggle to get credit, and the options available to get around that problem, from cosigners to secured credit cards and more.
Why Is It Harder For Young People To Get Approved?
Many of you will have heard about it by word of mouth, or read in articles about how much more difficult it is for young people to be accepted for a loan or a credit card.
Unfortunately, what you have heard is often the case, as many financial institutions are simply unwilling to lend to young people. But for what reasons?
The simplest explanation is because lenders and credit card companies do not have enough evidence from young people that they can be trusted to borrow money.
A credit score is displayed on any individual’s credit report, and that report contains any previous finance taken out by the person.
Companies that lend money use these reports to ascertain whether people have a history of paying off debt on time.
As many young people have little or no history of borrowing, there is therefore little evidence of them making repayments, and thus no score.
Those with bad credit scores tend to have a history of defaulting on payments, so will also struggle to borrow again.
The good news is that even when many card issuers or lenders fail to trust people in their 20s with their products, there are still options available:
Use A Secured Credit Card
If your preference is a credit card over a loan, then a secured credit card could be for you.
These operate differently to other credit cards as they have a credit limit attached to them, which is calculated according to how much money you put on the card.
This acts as a protection for the card issuer.
Most credit cards simply have a credit amount determined by your credit score.
With secured cards, when the balance is paid off, the repayment will be shown on credit reports and will be reflected in your credit score.
Thus they are a good way to improve your score, making you more trustworthy for prospective credit suppliers.
Get A Co-Signer
For those in their 20s struggling to get finance, applying for a cosigner loan may be an option to consider.
A cosigner can be a friend or family member, as long as they are considered a responsible adult.
The important thing to consider is that a cosigner should be someone you have a close relationship with, as it relies on trust on their part, and is a huge responsibility for both parties.
Should you default on payments, the cosigner will have to make them instead, which is a lot to ask of someone you know.
As well as this, both parties will receive a negative score on their credit report. You should consider it a last-resort option.
Check Out Online Installment Loans
While many lenders may be reluctant to lend to those in their 20s, there are still many who will not focus on age and will lend to anyone in a position to pay back what they borrow.
To do this, rather than basing their decision to lend on your credit report and score, they will instead use employment status and bank account details as the basis for a decision.
If they are confident of you making repayments on time, you should be accepted irrespective of your age.
Installment loans, as the name suggests, differ from payday loans as there is more than one repayment date.
Such loans are flexible and can be arranged for a wide range of amounts with varied repayment periods tailored to your individual needs and financial situation.
If you are in your 20s and struggling to finance, there is no need to despair.
There are still a variety of options available to you in the finance market should you require a loan or a credit card.
Do your research and consider the best option for your situation.
Consider taking out an installment loan or look at other options such as a secured credit card, or if necessary using a co-signer.