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With an installment loan, you can make a purchase and pay off the balance over time with steady, even payments.
An installment loan could be especially helpful if you need to cover expenses, but aren’t able to save the money ahead of time.
Here’s what you should know about installment loans and where to get one:
- 17 online lenders for installment loans
- What are installment loans?
- Where can you get an installment loan?
- How do you qualify for an installment loan through an online lender?
- How to apply for an installment loan
- What is the difference between a payday loan and an installment loan?
- Installment loan alternatives
17 online lenders for installment loans
There are plenty of lender options to choose from if you need an installment loan. Here are Credible’s partner lenders that offer personal installment loans:
|Lender||Fixed rates||Loan amounts||Min. credit score||Loan terms (years)|
|7.99% - 35.99% APR||$7,500 to $50,000||Not disclosed by lender||2, 3, 4, 5|
|9.95% - 35.99% APR||$2,000 to $35,000**||550||2, 3, 4, 5*|
|7.99% - 15.19% APR||$10,000 to $50,000||740||3, 4, 5, 6|
|8.99% - 35.99% APR||$2,000 to $50,000||600||2, 3, 4, 5|
|6.99% - 24.99% APR||$2,500 to $40,000||660||3, 4, 5, 6, 7|
|11.25% - 24.5% APR||$5,000 to $40,000||640||2, 3, 4, 5|
|9.57% - 35.99% APR||$1,000 to $40,000||660||3, 5|
|7.99% - 35.99% APR||$2,000 to $36,500||600||2, 3, 4, 5, 6|
|7.49% - 24.49% APR||$5,000 to $100,000||700||2, 3, 4, 5, 6, 7
(up to 12 years for home improvement loans)
|18.0% - 35.99% APR||$1,500 to $20,000||None||2, 3, 4, 5|
|8.49% - 17.99% APR||$600 to $50,000 |
(depending on loan term)
|700||1, 2, 3, 4, 5|
|8.99% - 25.81% APR10||$5,000 to $100,000||Does not disclose||2, 3, 4, 5, 6, 7|
|11.69% - 35.99% APR7||$1,000 to $50,000||560||3, 5, or 7 years 8|
|8.49% - 35.99% APR||$1,000 to $50,000||600||2, 3, 5, 6|
|4.6% - 35.99% APR4||$1,000 to $50,0005||580||3 or 5 years4|
What are installment loans?
Installment loans are a kind of loan where you get the money in a lump sum and repay it over time with a fixed monthly payment.
There are two types of installment loans to choose from:
- Secured loans are backed by collateral — something of value you agree to give to the lender if you don’t repay the loan. This type of loan could be easier to qualify for because there’s less risk for the lender.
- Unsecured loans don’t require collateral. Because of the higher risk to the lender, this type of loan might come with slightly higher interest rates compared to a secured loan.
These loans can be used for a wide variety of purposes. Here are a few common installment loans you might come across:
- Personal loans are generally unsecured, though there are some lenders that offer secured personal loans. You can use a personal loan to fund almost any personal expense. For example, you could use debt consolidation loans to help repay debt or home improvement loans for house repairs.
- Auto loans are used for car purchases and are secured by the vehicle.
- Mortgages can be used to purchase homes, with those same homes acting as collateral.
- Private student loans are unsecured loans that you can use to pay for your college education.
Unlike an auto loan or mortgage that has a specific purpose and required collateral, a personal loan can be used for almost anything.
Learn More: Loans for Credit Card Consolidation
Why should I get an installment loan?
An installment loan is more than just a method to borrow money. You can also use an installment loan to:
- Establish a credit history. A positive credit history shows a lender that you’re able to repay the loan. You build a positive credit history through consistent on-time payments. By making full, on-time payments on your loan, you can potentially qualify for lower interest rates on future loans.
- Increase your credit score. Your credit score can also indicate how reliable you are when it comes to repaying debts. The higher your credit score, the better. By continually making on-time payments, you can increase your credit score and may be able to qualify for lower rates on other financial products.
- Make larger purchases. Large purchases, like a home or car, can rarely be made completely out of pocket. Installment loans allow you to afford expensive purchases with manageable monthly payments.
Where can you get an installment loan?
If you’re wondering where to get a loan, don’t worry — there are many lenders that offer installment loans, including:
- Online lenders offer quick access to installment loans and sometimes have less stringent requirements than banks and credit unions. If you have poor or fair credit, you might have an easier time getting approved by an online lender.
- Banks might offer larger loan limits and longer loan limits than online lenders. However, bank loans also tend to have stricter requirements to qualify.
- Credit unions are nonprofit organizations, so they generally offer lower interest rates than banks. Keep in mind that you’ll need to join the credit union before you can take out a loan, though.
Check Out: How to Get a $5,000 Personal Loan
How do you qualify for an installment loan through an online lender?
Each lender has its own requirements to qualify for a loan. However, there are a few common criteria that most lenders look for, including:
- Good credit history: If you have a strong credit history, you’re more likely to be approved.
- Verifiable income: Many lenders require you to earn a certain amount so they know you can make your payments.
- Debt-to-income ratio: Lenders look at your DTI ratio to see if you make enough money to afford another loan on top of any other debt you might have.
Some lenders also allow cosigners, which could make it easier to qualify. Having a creditworthy cosigner might also get you a lower interest rate compared to what you’d get on your own.
Before you borrow, estimate how much you’ll pay for a loan using our personal loan calculator below.
Check Out: Long-Term Personal Loans
How much do I qualify for?
The amount you qualify for depends on your financial situation. However, what you’re able to qualify for generally depends on two main factors: your credit score and the lender’s loan limit. Your credit score will affect your interest rate and whether or not you get approval.
Here’s an example of how credit scores will affect the interest rate on a $10,000 loan:
|How's your credit?||Credit score range||Average minimum rate|
|Excellent||750 - 850||13.93%|
|Good||700 - 749||18.33%|
|Fair||640 - 699||22.12%|
|Poor||300 - 639||26.62%|
Disclosure: This data is for a $10,000 loan amount.1
1The average minimum rate was calculated based on Credible.com users who requested personal loan prequalified rates between July 1, 2019, and July 31, 2019, for loans in the amount of $10,000 and $20,000, respectively, and who received rates through the Credible.com platform. The average minimum rates were then calculated across all of the the users within the same credit tier (Excellent 750+, Good 700-749, Fair 640-699, Poor <640). The credit scores for the users were based on Transunion soft credit pulls, not user self-reported data. If the user received more than one prequalified rate from more than one lender for multiple loan terms (e.g., loan terms between 2-7 years), the minimum prequalified rate received for the user within each data set (e.g., the $10,000 and $20,000 data set) was averaged across all users in the data set, not factoring in the term of the loan. Typically, however, shorter loan terms have lower rates.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
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Pros of installment loans
- Fast funding times: Installment loans allow you to access a large sum of money within a short amount of time. You can receive the funds for a personal loan within a week, and some lenders even offer same-day funding. This can be helpful in an emergency, when you need money quickly.
- Can build your credit score: Repaying your loan on time can increase your credit score, which will benefit you in the long run. It can help you access better loan interest rates and qualify for higher loan amounts.
- Fits into your budget: Just like rent, you can easily incorporate the monthly payments of installment loans in your budget. Before applying for a loan, you can determine how much you can afford to pay each month by factoring in different interest rates and extending or shortening the length of your loan. A longer repayment term will have lower monthly payments, but you’ll pay more in interest over the life of the loan. Meanwhile, a shorter repayment term will have higher monthly payments but will help you save on interest.
Cons of installment loans
- Potentially high interest rates: Installment loans have an added cost due to interest. Depending on your credit score and the type of loan, you may only qualify for loans with higher interest rates. The higher your interest rate, the more you’ll pay over time. If you can wait to borrow money, improving your credit score first — by paying down other debts and making on-time payments — can help you get lower interest rates.
- Fees: Many installment loans come with fees. Personal loans may have origination fees (the cost of processing your loan) on top of prepayment penalties and late fees. Mortgage fees are generally 2% to 5% of the home’s sale price. For a $300,000 home, this means you could pay between $6,000 and $15,000.
- Missed payments can damage credit: Making late payments or missing them entirely can have a negative impact on your credit. If you’re unsure if you can repay a loan on time, it’s better to avoid borrowing money.
How to apply for an installment loan
If you’re ready to apply for an installment loan, follow these four steps:
- Prepare ahead of time. Before you apply, gather any pertinent paperwork you’ll need to submit. This might include tax returns, pay stubs, or your photo ID. It’s also a good idea to check your credit report for any errors.
- Compare lenders. Be sure to consider as many lenders as you can to find a loan that fits your needs. Remember to compare not only rates but also repayment terms and any fees the lender might charge.
- Choose your loan. Once you’ve shopped around, pick the loan option that you like best.
- Finish the application. You’ll need to fill out a full application and submit any required documentation to apply for the loan. If you’re approved, the lender will have you sign for the loan so they can send you your funds.
If you’re ready to find your personal installment loan, remember to shop around and compare multiple lenders. Credible makes this easy — you can see your prequalified rates from all of our partner lenders in two minutes.
Can I get an installment loan with bad credit?
Yes, you can get an installment loan if you have bad credit. While some lenders have minimum credit score requirements, others specialize in providing loans to those with low credit scores.
Keep in mind that having a lower credit score still has its drawbacks when it comes to loans. The main downside is you’ll typically only qualify for higher interest rates. If you have poor credit and have a friend or family member with good to excellent credit, you may be able to add them to your loan as a cosigner. This can help you get approved for more loans and qualify for lower interest rates. Keep in mind, your cosigner is responsible for repaying your loan if you fail to make payments, and this can potentially damage your relationship.
Here are Credible’s partner lenders that offer installment loans for borrowers with bad credit:
|Lender||Fixed rates||Credit score|
|7.99% - 35.99% APR||Does not disclose|
|9.95% - 35.99% APR||550|
|11.25% - 24.5% APR||640|
|9.57% - 35.99% APR||660|
|7.99% - 35.99% APR||600|
|7.49% - 24.49% APR||700|
|18.0% - 35.99% APR||None|
|11.69% - 35.99% APR7||560|
|8.49% - 35.99% APR||600|
|4.6% - 35.99% APR4||580|
What is the difference between a payday loan and an installment loan?
A payday loan is another type of installment loan. However, payday loans come with much riskier terms compared to most other installment loans.
Here are several differences between payday loans and personal installment loans to keep in mind:
|Payday loans||Personal installment loans|
|Time to fund||Same day||Typically 1-7 business days
(depending on the lender)
|Repayment terms||About 2 weeks||1-7 years
(depending on the lender)
|Interest rates||300% to 500%||Varies|
|Credit check required?||No||Yes|
|Reported to credit bureaus?||No||Yes|
A personal installment loan is generally a much better and safer option if you need quick access to funds. Depending on the lender, your loan could be funded on the same day you’re approved.
Learn More: Online Cash Advance: What Is It and What Are the Alternatives
Installment loan alternatives
If you need to borrow money, there are other options available outside of installment loans. Here are a few other choices:
- Credit card: You can charge purchases on a credit card and pay them off over time. If you’re able to pay off your balance by the due date, you could avoid paying interest. However, if you can’t repay your balance in full by that time, you might be stuck with hefty interest charges.
- Personal line of credit: Similar to a credit card, a line of credit is a revolving type of credit — meaning you can repeatedly draw on your credit line as long as you continue paying it off. A personal line of credit is generally unsecured and might be tied to a checking account.
- Home equity line of credit (HELOC): Unlike a personal line of credit, a HELOC is secured by the equity in your home. While you might get a lower interest rate on a HELOC, keep in mind that you could lose your home if you default on the loan.
Find Out: How to Get a $20,000 Personal Loan
If you decide to take out a personal loan, remember to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare multiple lenders in two minutes.
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About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 5.40%-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 10%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.
Sarah Maroney has contributed to the reporting of this article.