8 Best Installment Loans of April 2024
Updated March 28, 2024 at 3:08 pm
An installment loan is an easy way for you to quickly get the money you need to consolidate high-interest debts or cover large expenses. With installment loans, you get a fixed interest rate and repayment term, meaning you know exactly what you have to pay back each month. This makes it easy to budget around.
When considering an installment loan, rates, fees and term length are good things to investigate. We’ve done the hard work for you by gathering some of the best installment loans in various categories along with some tips on the top features to look out for. Read on to learn more and find the installment loan that meets your needs.
Our Methodology Newsweek Vault’s loan experts evaluated multiple data points to help our readers make sense of their borrowing options across student loans and personal loans. To narrow down the best available offers, we weigh the product pros and cons across five core categories, including:
- Application process
- Eligibility requirements
- Interest rates
- Loan amounts (minimum and maximum)
- Repayment flexibility
Our Picks - Best for Low APR: Upstart
- Best for Long Repayment Terms: LightStream
- Best for Secured Loans: Best Egg
- Best for Same-Day Funding: SoFi
- Best for Bad Credit: Avant
- Best for Flexible Loans: Discover
- Best for High-Value Borrowing: BHG Money
- Best for Existing Customers: PNC Bank
Compare Personal Loans
Best Installment Loans of 2024
Best for Low APR
Upstart
on Credible’s website
Why We Chose It
Upstart offers fast and accessible personal loans to borrowers with no credit or credit scores as low as 300. Well-qualified borrowers may be able to take advantage of one of the lowest offered rates available.
Pros
- No prepayment fee
- Considers education and employment for loan approval
- Funding in one business day
Cons
- Only two term options
- Potentially high origination fee
- Need to verify identity to check rate
Best for Long Repayment Terms
LightStream
on Credible’s website
Why We Chose It
LightStream offers loan terms of up to 12 years, which is far longer than most lenders. As long as you apply on a banking business day and finish the verification process before 2:30 p.m., LightStream can provide you with your funding on the same day.
Pros
- 0.50% autopay discount
- Up to 12 years for repayment
- Will beat any qualified rate by 0.10%
Cons
- Rates and terms vary depending on loan’s purpose
- No customer service on Sundays
Best for Secured Loans
Best Egg
on Credible’s website
Why We Chose It
Best Egg offers a secured loan option to homeowners, which comes with an average APR discount of 20% compared to its unsecured loan. You can check your rate in just minutes without affecting your credit score.
Pros
- Average 20% APR discount with secured loan
- Considers more than just credit score
- Can get funding in as little as 24 hours
Cons
- Not available in Iowa, Vermont, West Virginia or U.S. Territories
- Must be a homeowner to qualify for secured loan
- Potentially high origination fee
Best for Same-Day Funding
SoFi
on Credible’s website
Why We Chose It
With SoFi, the majority of applicants get their money the same day as long as they sign the loan before 7 p.m. You can also take up to seven years to pay off your loan, which is longer than many other loan providers.
Pros
- Large maximum loan amounts
- Offers autopay and direct deposit discounts
- Same-day funding
Cons
- Need at least $1,000 in direct deposits a month to get discount
- Co-applicants add up to two weeks to processing
Best for Bad Credit
Avant
on Credible’s website
Why We Chose It
Avant only requires you to have a minimum credit score of 580 to apply, opening up its loans to borrowers with less-than-ideal credit. Avant also offers speedy, next-day funding and a decent variety of loan terms.
Pros
- Fast funding
- Low credit score requirement
- Simple application
Cons
- Somewhat low maximum loan
- High maximum APR
- $15 returned payment fee
Best for Flexible Loans
Discover
on Credible’s website
Why We Chose It
Discover personal loans come with competitive APRs. Plus, there are no prepayment or origination fees, and repayment terms can go all the way up to seven years.
Pros
- Next business day funding into your bank or to your creditors
- No origination or prepayment fees
Cons
- High minimum term
- Need household annual income of at least $25,000
- No option for a co-signer or co-borrower
Best for High-Value Borrowing
BHG Money
on Credible’s website
Why We Chose It
BHG Money provides personal installment loans up to $200,000, which is far more than the average lender. You can also get approved in as little as 24 hours.
Pros
- No collateral required
- No prepayment fee
- No application fees
Cons
- Slow to fund
- High minimum loan amount
- Not available in Illinois or Maryland
Best for Existing Customers
PNC Bank
Vault Verified
Why We Chose It
PNC Bank offers flexible loans with no application, prepayment or origination fees. The bank may also allow joint co-signers (based on your location), which could help make it easier to qualify for an affordable option. Plus, existing customers may be eligible for additional perks like lower rates and an autopay discount from an eligible PNC checking account.
Pros
- 0.25% discount for autopay
- No prepayment, application or origination fees
Cons
- Low max loan amount
- Takes a few days to get approved
- Rates and features vary based on zip code
What Is an Installment Loan?
Installment loans give you a predetermined amount of money at a fixed interest rate and set repayment terms. Having a fixed monthly payment that stays stable over the life of the loan makes it easy for you to fit into your budget.
Lenders pay installment loans in one lump sum. This is different than a credit card or other line of credit, where you have revolving credit that you can keep borrowing from up to a set limit.
Installment loans can be unsecured or secured, which is when you put up collateral just in case you go into default. There are several types of installment loans, including personal loans, mortgages and auto loans.
Typically, you use personal installment loans for things like debt consolidation, home improvement projects and medical bills. Lenders usually prohibit you from using a personal installment loan for things like student loans or down payments.
How Do Installment Loans Work?
To get an installment loan, you first need to see if you qualify for a loan. During this process, the lender typically does a soft credit check just to get a picture of your credit history, which doesn’t affect your credit score. After this check, the lender will provide you with a range of loans you qualify for. You’ll choose one and then submit a formal application.
On this formal application, you’ll likely need to verify your income and employment. The lender will also perform a hard credit check at this time to get a closer look at your financial past. Finally, once the loan is approved, it’s typically deposited into your bank account. If you’re using the loan to pay off debt, the lender might also be able to send it directly to your creditors.
Why Would You Need an Installment Loan?
Installment loans are a good option any time you need a specific amount of money and want to have a fixed repayment plan. Here are a few of the most common reasons people take out an installment loan.
- You encounter emergency expenses. If you’ve suffered a family emergency or totaled your car, you can use an installment loan to pay off these debts. Most lenders distribute installment loans in just a few days, meaning you can get money quickly to cover emergencies.
- You want to make home improvements. Putting an addition onto your house or remodeling your kitchen can be expensive. A personal installment loan lets you repay home improvement projects over time.
- You want to consolidate debt. When you have numerous high-interest credit cards and loans, you could be paying hundreds in interest each month. Many people use an installment loan to pay off their debt and consolidate everything into one lower monthly payment.
- You want to make a large purchase. Sometimes, you can use a personal loan to afford bigger purchases like furniture, a new computer or appliances. Just keep in mind, you shouldn’t use personal loans for things that don’t have any tangible value or return on investment.
- You have a lot of medical bills. Unpaid medical bills often get sent to collections, which can damage your credit score. You can use an installment loan to help avoid debt delinquency and pay off your medical debt.
How to Choose the Best Installment Loan
Finding the best installment loan for your needs will require you to do some comparing. Before you lock in a loan, consider the following factors.
Interest Rates
Interest rates should be one of your top priorities when choosing a loan, as they determine how much you’ll end up paying. For example, with a five-year, $5,000 loan with a 10% interest rate, your monthly payment would be $106.24. But with a 25% interest rate, that jumps to $146.76. To qualify for the lowest interest rates, you’ll need to have a good-to-excellent credit.
Repayment Terms
Installment loan repayment terms typically range from one year to five years. Having a longer term can make your monthly payment shorter, but it also means you’ll be paying more in interest over the life of the loan. Consider a $5,000 loan with one-year and five-year repayment terms. With the one-year term, you’ll pay $439.58 a month and $284.95 in total interest. The five-year term has a more reasonable $106.24 monthly payment, but you end up spending $1,374.11 in interest.
Additional Fees
Many loans charge an origination fee, sometimes also called an application fee or processing fee. It’s a fee for processing your application. You might also have to pay late fees and returned payment fees if you don’t pay on time. Finally, some lenders may charge an early repayment fee if you plan on paying off your loan early.
Loan Amount
You need to make sure that you’re taking out an amount that’s not too high or too low. Not getting a big enough loan to cover your expenses could just put you further into debt. On the flip side, taking out a loan that’s more than you need might make your monthly payments higher than you can afford.
Lender Reputation
A lender could look amazing on paper, but reviews might say otherwise. Always thoroughly investigate any lender you’re considering to see what others who have taken out installment loans have to say. It’s important to work with a lender that provides clear terms, offers transparent information and has a positive reputation for customer service.
Pros and Cons of Installment Loans
As far as personal installment loans go, they’re a good option for many people. But that doesn’t mean they’re right for everyone. Take a look at these pros and cons to help you understand the full picture.
Pros
- Fixed repayment schedule that makes payments predictable
- Ability to use the loan for a variety of purposes
- May offer lower interest rates than credit cards
- Fast funding for emergencies
- Lump-sum payment
Cons
- High interest rates if you have poor credit
- Numerous fees can add on to your loan’s cost
- May have to deal with prepayment penalties
Types of Installment Loans
There are many different types of installment loans. The most common include the following.
Personal Loans
Personal loans are a type of loan you can take out for various purposes. For example, you can use it to pay off home renovations, unexpected expenses, moving costs, medical debt and credit card debt.
- Credit line range: $1,000 to $100,000
- Best for: Individuals who want to make a lump-sum payment toward a large expense.
Auto Loans
If you don’t have the money to buy a car outright, you can take out an auto loan. Your lender pays off your vehicle for you, and then you make payments directly to your lender until it’s paid off.
- Credit line range: $5,000 to $100,000
- Best for: People who don’t have the full cash amount they need to purchase a new vehicle.
Student Loans
Getting an education can be expensive, and you can use student loans to offset tuition, room and board and textbook expenses. Private student loans from banks might require you to have a co-signer, especially if you don’t have a credit score or steady income.
- Credit line range: $2,000 to $200,000
- Best for: Students pursuing undergraduate or graduate studies who don’t have enough money to pay their full tuition.
Mortgages
Most people don’t have the money to pay for a house in cash, so you can take out a mortgage to help. This is a loan specifically designed for paying for real estate and usually requires you to make a downpayment. Your new home will be the collateral for the loan if you go into default.
- Credit line range: $30,000 to $1,089,300
- Best for: Individuals or couples who want to buy a home but don’t have enough money to pay for the home outright.
Frequently Asked Questions
What Is the Easiest Installment Loan to Get Approved For?
The easiest type of installment loan to get approved for would likely be a low-value, short-term loan, such as a payday loan. These types of loans give you an advance on your paycheck, but they come with predatory APRs that make them a dangerous choice. If you choose a payday loan, always make sure you pay it back on time.
Do Installment Loans Hurt Your Credit?
You might see a small ding in your score when you first take out the loan. But if you make consistent on-time payments, installment loans shouldn’t hurt your credit. Adding a new account and decreasing your credit utilization can actually improve your score.
Which Type of Installment Loan Does Not Require a Credit Check?
Many installment loans do require a credit check because lenders want to make sure you’re able to repay the loan before they hand you a large sum. But payday or cash advance loans sometimes don’t require a credit check, as they use your paycheck as collateral if you default. You might be able to find more traditional installment loans that don’t require a credit check if you do some digging, but these will likely come with high interest rates.
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