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When shopping for an installment loan, compare APRs across multiple lenders to make sure that you’re getting a competitive rate. Also look for lenders that keep fees to a minimum and offer repayment terms that fit your needs.
Loan details presented here are current as of the publish date, but you should check the lenders’ websites for more current information. The installment loan lenders listed here are selected based on factors such as APR, loan amounts, fees and credit requirements.
What is an installment loan and how does it work?
Installment loans are financial products that let you borrow a fixed sum of money and pay it back slowly over time. These loans, which include personal loans, typically come with the benefit of fixed interest rates and fixed monthly payments, so you always know how much you owe each month and when your final payment will be due. Say you were to borrow $30,000 with a 10.99 percent APR and a 60-month repayment timeline. You would pay $652.12 a month for five years.
What can I use an installment loan for?
One of the attractive features of an installment loan is its versatility. You can get an installment loan to pay for a major purchase, such as a car or a home. A personal loan, which is a type of installment loan, can typically be used for a variety of purchases. They can be used to pay for:
- A car.
- A home.
- Debt consolidation.
- A wedding.
- Home remodeling projects.
- Emergency expenses.
Types of installment loans
There is a wide range of installment loans, all designed for specific purposes. Here are some of the most common:
- Personal loan: A personal loan is a lump-sum loan that’s usually repaid in two to five years. It’s usually unsecured, and the money from the loan can be used in myriad ways: to consolidate debt, fund home improvement projects, pay for a wedding, cover emergency expenses, and more.
- Mortgage: A mortgage is a secured loan that is used for a single purpose: to buy property, usually a house. The home serves as collateral and secures the loan, which is paid monthly over a long term, usually 15 or 30 years.
- Auto loan: An auto loan is a secured loan that is used to buy a car, with the vehicle serving as collateral. The loan is paid monthly, typically in two to seven years. Use our auto loan calculator to determine what your monthly payment might be.
Can I get an installment loan if I have bad credit?
Installment loans for bad credit are certainly out there. But you’ll need to do your due diligence, shop around and compare several options. Every lender has different eligibility requirements, so check to see which you might qualify for with shaky credit. You can also expect your installment loan to have a higher interest rate, and possibly more loan fees, such as origination fees.
How an installment loan affects your credit
The strength of your credit impacts the loan amounts, rates and terms you qualify for. Once you get an installment loan, here’s how it can impact your credit:
- Making on-time payments could boost your credit score. As payment history makes up 35 percent of your score, being on time with your monthly payments can help your credit. On the flip side, being late or having missed payments could negatively impact your score.
- Paying the loan in full can improve your credit. While paying the loan off on time and in full can bump up your score, paying it off early most likely won’t have a huge impact over paying it off on the agreed-upon schedule.
- It’ll stay on your credit report for 10 years. Once your loan is paid off, it’s considered a closed account. Closed accounts that are in good standing could do good for your credit, as they stay on your credit file for 10 years.