Borrow confidently with the best installment loans of April 2024

Methodology

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To determine the nine best lenders for installment loans, we reviewed 30 companies across five categories: loan cost, loan details, eligibility requirements, repayment experience and customer service. We drilled down in each category, seeking to weigh everything potential borrowers could value.

• Number of companies reviewed: 30
• Number of data points analyzed: 900
• Number of features we considered: 30
• Number of primary data sources used: 35 

View our complete methodology below to understand how we selected the best lenders for installment loans.

Show summary

• Upgrade

  : Best installment loan

• SoFi

  : Best for fast funding

• LightStream

  : Best for borrowers with excellent credit

• PenFed Credit Union

  : Best for small loan amounts

• Discover

  : Best for no origination fees

• Prosper

  : Best for peer-to-peer borrowing

• LendingPoint

  : Best for fair credit

• Laurel Road

  : Best for cosigned loans

• Upstart

  : Best for borrowers with bad credit

Upgrade

Best installment loan

APRs

8.49% to 35.99%*

Loan amount

$1,000 to $50,000

Minimum credit score

580

5/5

Compare Rates

On Credible’s Website

SoFi

Best for fast funding

APRs

8.99% to 29.49%*

Loan amount

$5,000 to $100,000

Minimum credit score

680

4.8/5

Compare Rates

On Credible’s Website

LightStream

Best for borrowers with excellent credit

APRs

6.99% to 25.49%*

Loan amount

$5,000 to $100,000

Minimum credit score

Undisclosed

4.6/5

Compare Rates

On Credible’s Website

PenFed Credit Union

Best for small loan amounts

APRs

7.99% to 17.99%*

Loan amount

$600 to $50,000

Minimum credit score

Undisclosed

4.5/5

Compare Rates

On Credible’s Website

Discover

Best for no origination fees

APRs

7.99% to 24.99%*

Loan amount

$2,500 to $40,000

Minimum credit score

660

4.5/5

Compare Rates

On Credible’s Website

Prosper

Best for peer-to-peer borrowing

APRs

8.99% to 35.99%*

Loan amount

$2,000 to $50,000

Minimum credit score

560

4.4/5

Compare Rates

On Credible’s Website

LendingPoint

Best for fair credit

APR range

7.99% to 35.99%*

Loan amounts

$2,000 to $36,500

Minimum credit score

600

4.4/5

Compare Rates

On Credible’s Website

Laurel Road

Best for cosigned loans

APR range

9.49% to 24.25%*

Loan amounts

$5,000 to $45,000

Minimum credit score

660

4.3/5

Compare Rates

On Credible’s Website

Upstart

Best for borrowers with bad credit

APR range

7.80% to 35.99%*

Loan amounts

$1,000 to $50,000

Minimum credit score

300

4.1/5

Compare Rates

On Credible’s Website

Why get an installment loan?

• Spread out the cost over time. You can repay an installment loan over several years, which can help you cover large, unexpected expenses.
• Use the funds for almost any purpose. The most common uses of personal loans include debt consolidation, home improvement and funding major purchases — but you can use your funds in nearly any (legal) way you need. However, most lenders will not allow funds to be used for college or small business expenses.
• Consolidate debt with a better interest rate. You can use a personal installment loan to refinance high-interest debt, potentially saving money and simplifying repayment. Check out our list of the best debt consolidation loans.
• Avoid putting up collateral. Most installment loans are unsecured, so you don’t have to back the loan with a valuable asset. If you default on your loan, your credit will be impacted, but you won’t lose any collateral.
• Build credit with on-time payments. Payment history is the most important factor in determining your FICO credit scores, accounting for 35% of the calculation. Regular, on-time personal loan payments can build your credit history and improve your credit scores over time.

What is an installment loan?

An installment loan is a type of loan that offers a lump sum of funding upfront. After receiving your loan, you’ll pay it back in installments over a set period.

Installment loans differ from revolving forms of credit, which you can draw on as needed and pay back as you go. A credit card is one example of revolving credit, while personal loans, auto loans, student loans and mortgages are all installment loans.

While the exact rates and terms offered vary by lender, personal installment loans are commonly repaid over two to seven years, come in amounts up to $100,000 and often have APRs between 7% and 36%.

Example: Let’s say you need a $20,000 personal loan to fund home repairs. Your lender offers you a 15.00% APR and a three-year repayment term. Your monthly dues would be $693 and you’d pay $4,959 in interest charges over the life of your loan.

Installment loan examples

Personal loans aren’t the only type that fall into the installment loan category. Other installment loans include:

• Mortgages are a type of secured installment loan used to purchase property that uses your home as collateral. They’re usually paid back over 15 or 30 years, and rates can be fixed or variable.
• Auto loans are secured loans used to purchase a vehicle and commonly have terms from two to seven years. Rates are typically fixed, and the car you purchase serves as collateral for the loan.
• Student loans are available from private lenders and the federal government. While private loans sometimes have lower interest rates, federal loans come with robust borrower benefits, including interest subsidies, repayment plans and forbearance options. Terms can range anywhere from five to 20 or 25 years.
• Small business loans are installment loans for business expenses. Bank loans may have terms of one to five years or longer, while some Small Business Administration (SBA) loans allow repayment over 25 years. Rates can be fixed or variable.
• Buy now, pay later (BNPL) is a type of small consumer loan you can often choose at checkout to finance a purchase. You usually repay a BNPL loan in four payments over six weeks at 0% interest. Longer repayment terms may be available but will likely come with interest charges.

Where to find installment loans

The type of installment loan you’re seeking will determine where to begin your search. For example, you can find auto loans at dealerships or from the automaker, in addition to traditional bank and credit union loans. For personal installment loans, your options typically include:

• Banks can have stricter eligibility requirements, and the funding time may take longer than with an online lender. On the plus side, some banks offer interest rate discounts to existing banking customers.
• Credit unions are known for offering competitive interest rates and flexible terms. However, you’ll need to become a member of the credit union to borrow a loan — some credit unions allow anyone to join, while others require that you belong to a certain community or work in a specific industry.
• Online lenders can offer a streamlined application process, fast funding and competitive interest rates. The online space also has some predatory lenders, so beware of any lender that makes promises that sound too good to be true or pushes you to act quickly.
• Buy now, pay later apps like Klarna, Affirm and Afterpay offer a way to finance big purchases. You may be able to avoid interest charges if you pay off the expense over six weeks.

Installment loans can be a beneficial tool if you can’t cover a cost out of pocket, since they offer funding upfront that you can repay over a series of months or years. As you make on-time payments on your loan, you can also build a positive credit history. Plus, personal installment loans can be used for almost any purpose, including covering a major purchase, renovating your home or consolidating high-interest debt.

However, since installment loans charge interest and fees, you could end up paying significantly more than you borrowed, depending on your rate and term. Plus, you have to request a specific amount upfront, which may not be ideal if you have unpredictable costs, such as with a home renovation project. (In this case, a home equity line of credit may be a better option.)

Finally, it may be tough to qualify for an installment loan — lenders commonly require credit scores in the mid-600s, a debt-to-income ratio of 43% or lower and a stable income. For some borrowers, it may be best to qualify for a secured installment loan or to apply with a creditworthy cosigner or co-borrower.

4 tips for comparing installment loan offers

1. Look at APRs, not interest rates

An interest rate tells you the cost of borrowing as a percentage of your loan amount, but it doesn’t include fees that will drive up your cost. A loan’s APR, on the other hand, includes the interest and fees associated with your loan, giving you a more accurate, apples-to-apples way to compare loan options.

2. Crunch the numbers

Before selecting a lender, use a personal loan calculator (like this one from Calculator.net) to determine how much each loan offer will cost monthly and overall.

The repayment term you select can play a big role in your borrowing cost. Although longer repayment terms can result in smaller monthly payments, you’ll pay more over the life of the loan because interest has more time to accrue. Generally, you should choose the shortest loan term you can afford.

Example: Let’s say you’re comparing three $25,000 loan offers, each with a different APR and repayment term. As you’ll see, a lower APR doesn’t necessarily mean a lower overall cost.

Although Loan 1 has the lowest monthly dues, you may consider Loan 3 for its lower overall cost of borrowing — you’ll pay $2,348 less in interest, despite its higher APR, because of the shorter loan term. Ultimately, the loan you choose will come down to your needs: Is it more important to get a low monthly payment or to minimize your total out-of-pocket costs?

3. Consider your timeline

Each lender has its own process for reviewing and funding personal loans, so they each have unique approval and funding timelines. For example, online lenders like Sofi and LightStream may fund your loan the same day you’re approved, while smaller banks and credit unions could take up to a week to approve and fund your loan.

If you’re in a time crunch, refine your search to lenders that offer fast funding. If you can afford a slightly slower turnaround, you can consider a broader range of loan offers.

4. Weigh lender perks and customer service

In addition to loan costs and funding timelines, dig into each lender’s reputation and any additional features or perks they offer. Good customer service and a user-friendly digital platform go a long way, and user reviews can provide valuable insight into these factors and how lenders have treated their customers in the past.

Beyond that, consider any standout features that are important to you, like rate discounts, hardship options or the ability to apply with a co-borrower or cosigner.

How to get an installment loan

1. Check your credit

Your credit scores play a major role in whether your application is approved and the interest rate you receive. You can often check your scores for free with your credit card issuer or financial institution, or you can purchase it from a third-party service.

Go to AnnualCreditReport.com to receive free weekly copies of your credit reports. You may spot errors that are dragging down your scores. If that’s the case, submit a dispute with the reporting credit bureau to try to have them removed.

If your financing needs aren’t urgent, waiting to apply and taking steps to improve your credit scores can be worthwhile. Not only will higher scores make it easier to qualify, but you may also receive a lower interest rate and save money over the life of your loan. Generally, the higher your scores, the better. (If you need money quickly and can’t afford to wait, consider using a cosigner to improve your application.)

2. Determine your budget

Examine your income and expenses to estimate how much you can reasonably afford to pay toward an installment loan each month — this step can help you avoid overborrowing. Look for areas where you may be able to increase your earnings or cut back on spending. Use a personal loan calculator to understand how an installment loan can fit into your budget.

3. Gather your financial documents

Pulling your documentation together ahead of time can help streamline the application process and save you time. While the documents you’ll submit may vary by lender, you can expect to provide:

• A form of ID, like a driver’s license or passport
• Mortgage statements or a copy of your rental agreement
• W-2s, pay stubs, or bank statements

If you’re applying with a cosigner or co-borrower, they will need to submit the same documents.

4. Get pre-qualified with multiple lenders

Many lenders let you pre-qualify for a personal installment loan online without impacting your credit scores. You’ll get a sense of your eligibility and the rates and terms you may receive, but remember that your final offer could change after you formally apply and the lender runs a hard credit check.

5. Compare loan offers

Look for the loan with the lowest interest rate, few (or no) fees and repayment terms that work for your budget. Examining APRs will give you an apples-to-apples comparison since APR includes both interest and fees.

It may be easy to go with the first lender that offers you a loan, but you can save money on interest over the life of the loan by shopping around.

In addition to the cost of the loan, compare factors like qualification requirements, customer service reviews, funding timeline and whether the lender offers hardship options.

6. Apply for a loan

Once you’ve picked the best loan offer, you’ll fill out and submit an official loan application. You’ll need to provide personal and financial information, as well as verification documents. If you’re applying with a cosigner, that person will provide their information, too.

As part of the application review process, your lender will perform a hard credit pull, which can drop your credit scores by about five points.

7. Repay the loan as agreed

If your loan is approved, you’ll sign your loan contract and receive your funds. You’ll start paying your loan back on the agreed-upon terms — review your loan agreement carefully to see when your first payment is due. Consider setting up autopay so you don’t miss any bills. Some lenders discount your interest rate if you use automatic payments.

How do installment loans affect your credit?

Installment loans can help or harm your credit, depending on how you pay them back. If you make on-time payments, you should see your credit improve over time. However, late or missed payments will damage your credit.

You may also see a slight dip in your credit scores when you take out the loan and the lender runs a hard credit inquiry. However, your scores should bounce back if you repay your loan on time.

Getting an installment loan with bad credit

If your credit scores are below 600, getting a loan can be challenging — but it’s not impossible. The following strategies can help you qualify for an installment loan with bad credit:

• Improve your credit scores. This won’t happen overnight, but with diligence and patience, you can boost your scores and make it easier to qualify for an installment loan with reasonable rates. The most important step is to make all debt payments on time. You can also pay down credit card balances, dispute credit report errors and consider becoming an authorized user on a loved one’s credit card account (if it has a long history and low balance).
• Compare multiple lenders. Some lenders are more willing than others to work with borrowers with bad credit, and some consider alternative credit data (like timely utility payments and savings account balances) when making lending decisions. Shopping around can help you zero in on the best lender with the lowest rates.
• Apply with a second person. Applying with a creditworthy cosigner or co-borrower can improve your chances of approval because their positive credit history reduces the lender’s risk. Both cosigners and co-borrowers are responsible for repaying the loan if you fall behind, but only a co-borrower shares equal access to the loan funds.
• Get a secured loan. Some personal loans are backed by collateral, like your savings account, stock certificates or vehicle. Collateral lowers the lender’s risk because they can seize the collateral if you fail to make loan payments. This decreased risk translates to improved odds of approval and more competitive rates. But remember that you will lose your asset if you default on the loan.
• Borrow a smaller amount. You probably won’t qualify for a $100,000 loan with bad credit, but you’re more likely to be approved if you request a smaller amount. Then, you can work on improving your credit and focus on repaying the loan as agreed, and potentially apply for another loan down the line if needed.
• Consider a credit union. If you’re struggling to get a loan, focus your search on credit unions. They tend to have more relaxed eligibility requirements than other financial institutions. Some even offer payday alternative loans with rates under 28% — these loans are repaid in a year or less and are no larger than $2,000. You must be a credit union member to borrow a loan, and some credit unions have specific eligibility criteria like career affiliation or area of residence.

Installment loans vs. payday loans

While installment loans carry some risk, payday loans are a far riskier option. They may be easy to obtain, but payday loans can come with exorbitant interest rates of 400% or higher. You usually have to pay them back on your next paycheck. Not all borrowers can afford to do this, which results in them taking out another payday loan to pay back the first and getting trapped in a cycle of debt.

In contrast, rates on personal installment loans won’t exceed 36%, and you can repay your loan over years, not weeks. Some lenders also offer flexibility if you face financial hardship, such as payment modification or assistance finding a new job.

Installment loans with high APRs

You may also come across so-called guaranteed loans with no credit check. While these loans may not require that you pay them back on your next paycheck, they’re often just as predatory as payday loans, with APRs going into the triple digits.

Let’s say, for instance, that you borrow $2,000 at 299% APR. If you pay off that loan over a year, you’ll pay $4,425 in total interest charges, more than twice the amount you borrowed in the first place.

Alternatives to installment loans

Personal installment loans can be a great financial tool when used wisely, but if it isn’t the right choice for you, consider these alternatives:

• Use a credit card. You may be able to charge your purchase with a credit card, but keep in mind that credit card interest charges can get expensive fast. Good-credit borrowers may consider applying for a card with an introductory 0% APR — just be sure to repay the balance in full before the end of the promotional period or interest will begin to accrue.
• Get a side hustle. Finding a way to increase your income, perhaps by shopping for Instacart or driving for Uber, could help you cover costs without taking on more debt.
• Tap into your savings. Avoiding additional borrowing is a good option as long as you don’t deplete your emergency fund.
• Try a paycheck advance app. Apps like Earnin, Dave and MoneyLion can offer small-amount loans you pay back on your next payday. This option can be helpful as bridge financing to get you to payday, but be sure to plan for a smaller paycheck when the debt is repaid.
• Borrow from friends or family. Consider whether anyone in your life is willing to lend you money. Make sure you’re both on the same page about repayment expectations to avoid straining the relationship.

Methodology

To determine the best installment loans, our data research team gathered 900 data points from 35 primary sources, including lender websites and independent organizations like the Better Business Bureau and the Consumer Financial Protection Bureau. We analyzed 30 popular lenders across five categories to narrow our list to the top nine personal installment lenders.

Loan cost (25%)

In our estimation, the best installment loan is one that costs the least. With that in mind, we prioritized lenders that offer low interest rates — we considered both starting rates and a lender’s highest rate. Lenders received extra points for offering a pre-qualification process and a rate discount for enrolling in autopay.

Loan details (20%)

This category examined the meat and potatoes of each loan. We assessed details like:

• Loan amounts
• Fees
• Funding timeline

Eligibility (25%)

A great installment loan won’t help if you can’t qualify. In this category, we assessed eligibility criteria like minimum credit score and income requirements, geographic availability and whether they permit cosigners or co-borrowers.

Repayment (20%)

Here, we assessed the repayment experience. Does the borrower have multiple repayment term options to choose from? Are hardship options available? Will the borrower incur a penalty for repaying the loan early?

Customer experience (10%)

The loan experience doesn’t end when funds are disbursed. For this category, we examined each lender’s customer service options, including methods of communication and mobile app availability. We also leveraged independent organizations — such as the Better Business Bureau, the Consumer Financial Protection Bureau and Trustpilot — to better understand lenders’ past behavior toward borrowers.

What didn’t make the cut

We reviewed 30 personal installment lenders before narrowing our list to the nine best. Many popular lenders didn’t measure up, including:

Frequently asked questions (FAQs)

Can I get an installment loan without a credit check?

While some installment loans don’t require a credit check, these loans typically come with exorbitant APRs in the triple digits and high fees. Be wary of loans that don’t need a credit check since they may be predatory loans with unaffordable interest rates.

Can I get an installment loan with a cosigner?

Yes, some lenders let you apply for an installment loan with a cosigner. Adding a creditworthy cosigner to your application could help you get approved or access better interest rates. Be sure to repay the loan as agreed — if you don’t, your cosigner will be on the hook for repayment, which could damage their credit and your personal relationship.

How can I use an installment loan?

You can use an installment loan for various purposes. Some installment loans include student loans, car loans, home loans and personal loans. Personal loans can be used for almost anything, such as home repairs, medical bills, debt consolidation, weddings, vacations or other large purchases.

What happens if I can’t repay an installment loan?

Missing payments on an unsecured installment loan can result in damaged credit. Plus, your loan may become delinquent and eventually be sent to a collections agency. If you borrowed a secured loan, like an auto loan, the lender can repossess your collateral to recoup its costs.

Can I repay an installment loan early?

Yes, you can typically repay an installment loan early — but read your loan agreement first. Some lenders enforce prepayment penalties, which are fees you may be charged for paying off your loan ahead of schedule. While these fees aren’t common, it’s smart to be sure before repaying your loan early.