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Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 1, 2024, 12:21pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Whether you’re shopping for a home, searching for a car or need cash to cover emergency expenses, chances are you’ll use an installment loan to get the necessary financing. The best installment loans offer flexible loan amounts and repayment terms, as well as accessible qualification requirements and competitive interest rates.
Why you can trust Forbes Advisor: Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the loans methodology for the ratings below.
29 nationwide lenders researched
16 data points evaluated and scored
4 levels of fact-checking
Compare Personal Loan Rates
Best Installment Loans of 2024
Best Overall Personal Loan
SoFi®
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state. Founded in 2011, SoFi has extended over $50 billion in loans and stands out for allowing high loan amounts and its availability of extended loan terms.
Loans are available from $5,000 to $100,000, making SoFi a great option for those with excellent credit who need to borrow a large amount of money. Loan amounts available may vary by the state you live in. Repayment terms range from two to seven years, making SoFi an incredibly flexible option for those with sufficient credit (minimum 650) and annual income (at least $45,000). SoFi also lets prospective borrowers submit joint applications—although co-signers are not permitted.
Approved borrowers are rewarded with comparatively low APRs. What’s more, SoFi doesn’t charge origination fees, late fees or prepayment penalties—a stand-out feature because personal loan lenders often charge origination or late payment fees at a minimum.
However, if you’re considering a debt consolidating loan from SoFi, keep in mind that the lender does not offer direct payment to a borrower’s other creditors. This means the loan proceeds will be deposited to your bank account and you’ll have to pay off your other lenders individually. The platform does offer customers a number of other perks and discounts.
Pros & Cons
Prequalification with soft credit check
Funding in as little as one to two days
High loan amounts and lengthy terms
Does not offer direct payment to third-party creditors for debt consolidation
Some applicants report difficult qualification standards
Co-signers are not permitted
Details
Eligibility:
Minimum credit score required: 650
Minimum annual income: $45,000
Co-signers not permitted
Loan uses:
Medical expenses
Credit card consolidation
Home projects
Moving costs
Best for Low Interest Rates
LightStream
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
LightStream offers loans with both a low minimum and maximum interest rate, along with a rate-beat program. LightStream’s unsecured personal loans range from $5,000 to $100,000 with loan amounts varying based on the loan purpose. In addition to offering appealing and flexible terms, LightStream charges no origination, late payment or prepayment fees. The lender also offers a 0.50% rate discount for borrowers who enroll in autopay.
Pros & Cons
No origination, prepayment or late fees
Low, competitive rates
Fast approval and funding
No prequalification process
No due date flexibility
Limitations on use of loan proceeds
Details
Eligibility:
Applicants should have several years of credit history
Minimum credit score: 660
Can’t prequalify
Loan uses:
Large expenses
Finance land, timeshares and tiny homes
Home project
Best for Fast Funding & Below-average Credit
LendingPoint
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
LendingPoint is an online lender based in Atlanta that offers personal loans to prospective borrowers in 48 states and Washington D.C.; it does not offer loans in Nevada and West Virginia. Prospective borrowers in eligible states can apply online and benefit from quick funding.
LendingPoint personal loans range from $2,000 to $36,500; Georgia loans have a minimum loan amount of $3,500. Repayment terms range from 24 to 72 months—or two to six years.
There are two main disadvantages to LendingPoint: high maximum APRs and origination fees. While you can typically avoid high APRs by maintaining a high credit score, LendingPoint origination fees (up to 10%) depend on the state you live in.
Pros & Cons
Quick funding
Low credit score requirements
No prepayment penalty
Origination fee up to 10%
Co-signers or joint loans not permitted
Not available in Nevada and West Virginia
Details
Eligibility:
Minimum credit score: 600
Must live in a state other than Nevada or West Virginia
Doesn’t allow co-signers or co-applicants
Loan uses:
Debt consolidation
Home project
Medical expenses
Best for Bad Credit
Upgrade
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services. Although maximum APRs are on the high end compared to other online lenders, Upgrade makes loans available to those with poor credit history.
Loans amounts, which range from $1,000 to $50,000. Upgrade has two- to seven-year terms available. Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Pros & Cons
Low minimum credit score requirement
Borrowers can use loans to cover business expenses
Offers direct lender payoff for debt consolidation loans
High APR range
Charges fees for origination, late payment and insufficient funds
Details
Eligibility:
Minimum credit score: 580
No minimum income requirement
Allows co-applicants
Loan uses:
Debt consolidation
Home projects
Large expenses
Business expenses
Best for Comparing Multiple Offers
Universal Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Universal Credit is an online lending platform that offers personal loans between $1,000 to $50,000 through its partners. Repayment terms range from three to seven years.
While Universal Credit makes finding a personal loan accessible even to those with damaged credit, it comes with a few tradeoffs. First, it charges high APRs, well above the most competitive rates seen on our list. Second, Universal Credit charges a 5.25% to 9.99% origination fee on all personal loans. Because this is deducted from your loan proceeds, you’ll need to factor this in when determining your loan amount to ensure you receive the necessary amount after the fact.
Pros & Cons
Flexible qualification requirements
Next-day funding
No prepayment penalty
High APRs
All personal loans charge a 5.25% to 9.99% origination fee
We reviewed 29 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
Loan cost: 35%
Loan details: 20%
Eligibility and accessibility: 20%
Customer experience: 15%
Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
When comparing installment loans, always evaluate lenders based on available loan amounts, repayment terms and fees. Beyond those factors, follow these tips to find the most appropriate installment loan for your needs:
Look up your credit score. Before comparing installment loans, check your credit score through your credit card provider or another free credit scoring website. Understanding your credit profile can provide insight into your approval odds and the interest rate you’re likely to qualify for from each lender.
Evaluate your budget. In addition to determining how much you need to borrow, review your budget to see how much you can afford in monthly payments. Then, narrow lenders to those that offer borrowing limits in line with your needs.
Take advantage of prequalification. Many online lenders let prospective borrowers prequalify for a loan without a hard credit inquiry. This makes it possible to see what annual percentage rate (APR) you’ll qualify for at various lenders without impacting your credit score.
Choose an appropriate repayment term. Beyond the total loan amount and APR, the repayment term also impacts the monthly cost of an installment loan. The longer the repayment loan, the lower the monthly payment amount. For that reason, it’s best to choose a lender that offers a broad range of loan terms.
What Is an Installment Loan?
An installment loan is a type of financing that borrowers receive as a lump-sum payment, and then repay over a set amount of time—usually up to seven years. Borrowing limits are lender-specific and depend on the type of loan, but typically range anywhere from $250 to $100,000 for personal loans. Loan amounts for installment home and auto loans are based on the value of the underlying collateral.
In general, installment loans can be used to finance the following:
Homes
Cars
Home improvements
Weddings or other events
Emergency or otherwise unexpected expenses
Debt consolidation
How Do Installment Loans Work?
Installment loans are typically available from traditional financial institutions like banks and credit unions, as well as online lenders. A prospective borrower applies for a loan, accepts an offer and then awaits the approval and verification process. Funds are disbursed to the borrower’s bank account as a lump sum, and interest starts to accrue in the first month. Loan payments are generally made monthly over the course of the loan term—usually between a few months and seven years.
Types of Installment Loans
Because they cover such a broad range of financing options, there are several types of installment loans. Expect to make monthly installment payments if you’re applying for any of the following loans:
Personal loans. Personal loans are the most flexible type of installment loan, as the funds can be used for a wide range of purposes. The best personal loans extend from around $250 up to $100,000, depending on the lender. This type of financing is usually unsecured and issued by traditional banks, credit unions and online lenders.
Auto loans. Auto loans are typically extended through car dealerships at the time of purchase but also are available through independent banks and credit unions. As with other installment loans, payments are made on a monthly basis, with interest accruing on the entire loan balance at a fixed rate. Loan amounts are based on the value of the vehicle and the borrower’s down payment amount.
Mortgages. Mortgages are used to finance the purchase of real estate and are secured by the home being purchased. Repayment terms are generally 15 or 30 years, and while many mortgages are fixed, some come with variable interest rates.
Student loans. Student loans may also come with variable or fixed rates, which can result in different payment amounts from month to month. Payments must be made monthly until the loan balance is repaid in its entirety.
Pros and Cons of Installment Loans
Compared with revolving debt like credit cards and home equity lines of credit (HELOCs), an installment loan is often better for large, one-time purchases or financial needs. But before you apply, understand the benefits and which pitfalls to avoid.
Can help build credit if you make all payments on time
Cons of Installment Loans
Lenders may charge fees
Can damage your credit if you don’t make all payments on time
Overall interest charges may be high especially for longer-term loans
How to Qualify for an Installment Loan
The exact steps to get an installment loan might differ depending on your specific lender. However, you can follow these general steps:
Figure out how much you need and can afford. You can use a personal loan calculator to estimate what your monthly payments might be, and then compare this against what you have available in your budget. Do this first to avoid costly mistakes later.
Check your credit. It’s key to check your credit report in case you need to fix any errors that have a negative impact. It’s also a good idea to check your credit score to understand which lenders you may be eligible for. Checking your own credit doesn’t have a negative impact on your score.
Gather your financial documents. Most lenders will require the same documents when you apply, including pay stubs, bank statements and copies of your ID. Gather these in advance to speed up the application process.
Prequalify with multiple lenders. Once you understand how much you need to borrow and your credit score, prequalify with potential lenders. This will let you see what terms you may qualify for without impacting your credit score. Use this information to compare each lender and find the best offer.
Submit your application. Once you find an offer you like, it’s time to submit your formal application. At this point, your lender will run a hard credit check, which temporarily dings your credit score. You’ll also need to upload the required documents.
Sign and repay. If you’re approved, your lender will send you a final loan agreement to sign. Once you sign, you’ll typically receive your funds via direct deposit within a few business days, depending on your lender. Consider signing up for autopay so you never miss a payment.
Installment Loans vs. Payday Loans
Besides the funds from installment and payday loans being paid out as a lump-sum amount, they don’t have many similarities.
Installment loans: Installment loans are typically paid off over the course of years, usually with fixed monthly payments. Installment loans are also generally more affordable compared to payday loans. In addition, installment loan payments are usually reported to the credit bureaus, which can help you build credit over time if you make your payments on schedule.
Payday loans: Payday loans are expected to be repaid by your next paycheck, although you can renew the loan for a fee if you can’t make the payment. Payday loans also tend to charge high fees that consumer protection groups regularly flag for predatory lending practices. In addition, payday loans don’t report your payments to the credit bureaus and don’t help you build credit.
You can get an installment loan from traditional banks, credit unions and online lenders. Depending on your lender, you can typically apply in person or online. If you prefer an in-person experience, look for installments loans through banks and credit unions.
What are the most common types of installment loans?
The most common types of installment loans are personal loans, student loans, mortgages and auto loans. In general, installment loan interest rates and payments are fixed, with variable APRs on some student loans and mortgages. Loan amounts also vary by loan type but are ultimately dependent on the lender and the borrower’s qualifications
What are installment loans used for?
Installment loans are used for large, one-time purchases. For example, mortgages are used to buy a home, student loans pay for a college education and auto loans pay for vehicles. In contrast, revolving credit like credit cards is used for everyday expenses.
Do installment loans help your credit?
If you pay your installment loans on time, it will generally help you build credit in the long term. However, if you miss payments or default on the installment loan, it could end up hurting your credit.
What happens if I default on an installment loan?
If you default on an installment loan, it’ll show on your credit report for the next seven years, which can make future credit approvals more challenging. If your loan was secured with collateral such as a car or savings account, your lender can repossess it. Your lender may also refer your account to a collections agency that can try various tactics to get you to repay, including suing you in court, garnishing your wages or putting a lien on your assets, like your home.
Do installment loans require a credit check?
Yes, reputable installment loans almost always require a credit check. There are only a few common cases where they don’t, such as for most federal student loans, excluding PLUS loans.
What happens if you pay off an installment loan early?
Some lenders may charge you a prepayment penalty if you pay off your installment loan early, but these fees are not common. To be safe, confirm with your lender. In most cases, paying off your installment loan early will save you a lot of money in interest charges, and free you of the debt even sooner.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.
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