Installment loans are loans you repay in equal payments over months or years. Lenders that offer installment loans have varying interest rates, repayment plans, qualification requirements and funding times. Show
This guide will help you decide if an installment loan is right for your plans and outline the steps to get one. Why trust NerdWallet? NerdWallet has rated and reviewed personal loans from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives, go through lenders’ pre-qualification processes, and compare lenders with each other as well as other financial products. We do not receive compensation for our ratings. Read more about our personal loan star ratings methodology and our editorial guidelines. Best installment loans of 2022Installment loans for debt consolidation. Installment loans for bad credit. Installment loans for fair credit. Installment loans with no credit. Midsize expenses and home improvement projects. Online installment loans. Installment loans for good credit. Installment loans for excellent credit. Online installment loans from a bank. What are installment loans?Installment loans are so named because you receive the loan funds all at once and repay them in fixed monthly payments, or installments. Unlike credit cards with revolving credit — which you use, repay and repeat for long periods — you use an installment loan once, usually to finance a large purchase. With a personal installment loan, you can borrow up to $100,000 and repay the loan over a term of two to seven years. Annual percentage rates are from 6% to 36%. How do installment loans work?After you’re approved for an installment loan, the lender deposits the funds into your bank account. You then repay the loan amount, plus interest, over the period stated in your loan agreement. For example, if you get a $20,000 loan with a four-year repayment term and 12% APR, you’d make 48 installments of $527. An installment loan calculator can show how the loan’s interest rate and repayment term affect monthly payments. On-time loan payments help build your credit, while missed payments can hurt it. Examples of installment loansMany loan types share the installment structure — you might even have one now. Here are a few examples of installment loans:
Where can I get an installment loan?Banks, credit unions and online lenders all offer personal installment loans. Compare lenders to find one that offers the best rates, terms and loan features. Some national banks offer unsecured installment loans. If yours does, it's likely a good place to start comparison shopping because banks sometimes offer lower rates or softer borrower requirements for existing customers.
Credit union members may have access to low-rate installment loans, because federal credit unions cap APRs at 18%. Credit unions may review your membership standing in addition to your credit profile on a loan application, which may improve your chance of qualifying.
Online lenders serve a wide range of customers. Some cater to borrowers with stellar credit, while others offer loans for bad-credit borrowers. Most online lenders let you pre-qualify to see what rate, term and monthly payment you qualify for. Pre-qualifying doesn’t affect your credit score, so you can check offers from multiple lenders.
When is an installment loan a good idea?Here are three purposes for which a personal installment loan can be a good idea:
How to compare installment loans
How to get an installment loan
How installment loans affect your creditLoans can help or hurt your credit, depending on how you use them. Since many lenders report to the three major credit bureaus, an installment loan gives you the chance to build credit and show financial responsibility by making on-time payments. However, if you miss a payment or fail to repay the loan, your credit score could suffer. One way to make sure your payments are on time is to set up autopay. Many lenders offer a small APR discount — usually a fraction of a percentage point — for borrowers who use autopay. Bad-credit installment loans
High-interest installment loans for bad creditThough you’ll ideally find an installment loan with a rate below 36%, some lenders offer high-interest loans with APRs above 36% that are more affordable than payday loans. These lenders may not check your credit, which means they’re taking on more risk. For you, that means a higher APR — sometimes up to 150% or 200%. While these loans may be repaid in installments, they are still unaffordable for most borrowers. Think of them as a last resort when your main alternative is a payday loan. Alternatives to bad-credit installment loansIf you have bad credit and need money quickly, explore other low-cost options first. Installment loans vs. payday loansWhile you repay an installment loan in regular installments, you typically repay a payday loan in full on your next payday. You may have an easier time planning for and repaying a loan that’s broken into multiple payments over several pay periods. Here are some of the differences between installment and payday loans. Installment personal loans Repaid over the course of months or years. Repaid in full within a week or two — usually on your next payday. APR of 36% or below, ideally. APR can be as high as 400%. Usually paid back online, over the phone or by check. Lenders withdraw the money from your bank account, using either a check you wrote ahead of time or your account information. What is the easiest loan to get with bad credit?The easiest loans to get approved for with bad credit are secured, co-signed and joint loans because you can use collateral or another person's creditworthiness to make up for your bad credit score. Payday loans, pawnshop loans and car title loans also are easy to get, but they're extremely expensive.
What apps will let me borrow money instantly?6 Loan Apps in 2023: Cash Advances and Overdraft Protection. Earnin: Best for low fees. ... . Dave: Best for repayment flexibility. ... . Brigit: Best for budgeting tools. ... . Empower: Best for fast cash. ... . Chime: Best for overdraft protection. ... . MoneyLion: Best for existing customers.. What is the easiest loan to get approved for?The easiest loans to get approved for are payday loans, car title loans, pawnshop loans and personal loans with no credit check. These types of loans offer quick funding and have minimal requirements, so they're available to people with bad credit. They're also very expensive in most cases.
Which lender is best for bad credit?The 5 Best Loans for Bad Credit in 2022. BadCreditLoans: Best for bad credit (up to $10,000). Upgrade: Best for debt consolidation (up to $50,000). OneMain Financial: Best for fair credit (up to $20,000). LendYou: Best for small short-term loans (up to $2,500). PersonalLoans: Best for fast funding (up to $35,000). |