Best Installment Loans for September 2024

An installment loan can be either secured, such as an auto loan or a home mortgage, or unsecured, such as a personal loan, student loan, or credit card. The former use collateral, such as a car, a house, or jewelry, to guarantee the loan and are often used to pay for that collateral. The latter provide borrowers with a lump sum of cash that they can use for a variety of purchases or to pay off debt. Both must be repaid monthly over a predetermined period of time.

Here’s a look at some of the best installment loans from a variety of lenders.

Our recommendations for the best installment loans

Best installment loans compared

Methodology

To form our list we only looked at top-rated and well-known lenders, considering factors such as borrowing limits, interest rates, and repayment terms. We also looked at the ease of application, approval, and funding, as well as any limits on the use of the funding.

How to select the right installment loan lender

There are many different installment loan lenders from which to choose. Your specific needs will inform your selection. These include:

How much do you need to borrow?

If you only need to borrow $2,000, LightStream and Happy Money would be out, as they have a minimum limit of $5,000. On the other hand, if you’re tackling a big home improvement project and need $80,000, a lender such as LightStream, which has a maximum loan amount of $100,000, would be required.

How soon do you need the funds?

Are you borrowing money for an upcoming purchase or to consolidate existing debt, in which case you probably don’t need the cash immediately? Or are you facing an emergency expense that needs payment now, such as an unexpected medical bill? Some lenders offer funding as quickly as the same day, while others may take a few days (or even weeks) to get the cash to you. Choose accordingly.

What can you afford to pay monthly?

Your monthly payment is a factor of how much you borrowed, the interest rate you’re offered, and the loan’s repayment term. You should shop around to find the lowest interest rates and a repayment term that fits your needs. This could mean choosing a longer term to get a monthly payment that fits your budget.

Do you need a joint loan?

On our list only Upgrade, LightStream, and OneMain Financial allow joint or cosigned loans (or both). The former let you borrow funds with someone else who is equally responsible for the debt, such as a spouse. The latter make it easier to qualify for larger loan amounts, lower interest rates, and better repayment terms if your cosigner has better credit than you have.

Alternatives to installments loans

Not sure if an installment loan is really the best choice for you? Here are some alternative funding options to consider.

Credit card

If you have available credit on a credit card, you may be able to take out a cash advance or utilize a balance transfer instead of applying for an installment loan from a lender. A cash advance will give you funds that you can use for pretty much any purpose, while a balance transfer allows you to consolidate or repay existing debt balances.

It’s important to note that both cash advances and balance transfers are subject to additional fees and special interest rates, so they may cost more than an installment loan. Still, some credit cards have introductory 0% APR balance transfers for a certain period of time, allowing you to pay off debt with no additional interest as long as you do it before the rate changes.

Home equity line of credit (HELOC)

If you have at least partially paid off your mortgage, you have equity in your home. A home equity line of credit (HELOC) allows you to tap into that value with a revolving line of credit. You can pull from those funds as needed at any time during your draw period (usually 10 years). Whether you want to pay off existing debt, make a large purchase, or cover an unexpected expense, funds from a HELOC are available on demand.

More about installment loans

If you’re still not sure about an installment loan and whether it will meet your financial needs, here’s a little more about how it works.

What is an installment loan?

An installment loan is taken out to cover any number of purposes, such as paying off debt, covering a large purchase, funding a home improvement project, or paying for unexpected expenses. Unsecured loans don’t require the borrower to put up any form of collateral and often come with a fixed interest rate that won’t change over time. Secured loans require collateral, which the lender can take if the loan goes unpaid.

How do they work?

An installment loan is typically taken out in one lump sum, meaning you receive the full loan amount (minus any fees) up front. The debt is then paid back in installments, usually equal monthly payments, over a set period of time.

You can usually repay the debt ahead of schedule, though prepayment penalties may apply with certain lenders. If you need additional funds, you’ll have to take out another loan.

Pros and cons of installment loans

Types of installment loans

While the most versatile type of installment loan is an unsecured personal loan, there are many other types that you might encounter. These include:

• Home equity loans.
• Auto loans.
• Mortgage loans.
• Buy now, pay later loans.
• Student loans.

TIME Stamped: Installment loans can fund a variety of needs responsibly

An installment loan allows borrowers to take out one lump sum that they can use for almost any purpose, including to make a large purchase, consolidate and pay off debt, cover an emergency expense, or fund a big project. It’s repaid in equal monthly payments over a set number of years, at the interest rate and terms offered at the time the loan is disbursed.

It may or may not require collateral to secure it and can often be funded as quickly as the same or next business day. As long as you are careful to make sure you can afford the monthly repayment, an installment loan can be a responsible method of funding, especially for large-ticket items.

Frequently asked questions (FAQs)

How do I qualify for an installment loan?

You have to meet certain eligibility criteria, which may involve your age, citizenship status, location, income, debt-to-income (DTI) ratio, credit score, and more. These requirements will vary depending on how much you need to borrow and whether the loan will be secured or unsecured.

What happens if you pay off an installment loan early?

Paying off an installment loan early can free up your monthly budget while saving you money in interest charges over the life of the loan. However, some lenders may charge penalties for paying early, so it’s important to check that before committing to the loan.

How do you get an installment loan with bad credit?

Your credit score and history are important factors in qualifying for an installment loan. If you have bad credit, you may improve your chances of approval by asking for a smaller amount, choosing a shorter loan term, applying with a creditworthy co-borrower or cosigner, or securing the loan with collateral.

What’s the easiest installment loan to get approved for?

It’s easier to get approved for a secured installment loan than an unsecured one. It’s also easier to get a joint or cosigned loan (assuming you apply with someone who has good credit) than to get approved for a loan on your own, especially if you have a poor credit score or little to no credit history.