Best installment loans of May 2024

If you need to consolidate debt, make home improvements, or cover just about any other expense, an installment loan can help. But lenders and the loans they offer vary, which can make finding the right loan tough. To help, we've considered the best personal installment loans for a wide range of credit profiles and uses. Below, you can compare installment loans by credit score requirements, rates and fees, loan maximums, and more. 

Compare installment loan rates in May 2024

Best installment loans

Not all installment loans are created equal. In fact, they vary greatly by lender. That’s why it’s a good idea to shop around and compare options. As you do so, pay attention to APRs, loan terms, fees, and funding times. Also, consider minimum FICO score and minimum income requirements, as some lenders are more lenient than others. Once you compare installment loans, you’ll be able to zero in on the best option for your situation.

The following loans are personal loans which are unsecured (no collateral required), usually fund within days of approval, and can be used for a wide range of purposes. 

Methodology

We evaluated the best installment loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, minimum credit score, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Types of installment loans

With an installment loan, you receive a lump sum of money upfront. Then, you repay it, plus interest, over time with fixed monthly payments. Some installment loans are secured and backed by collateral, which is something valuable you own, like your house or car.

If you default on a secured loan, the lender can seize your collateral. Other installment loans are unsecured and don’t require collateral, but may come with higher interest rates.

You can often prequalify to see rates and terms you might get before applying. It's not an offer of credit, but can give you a way to compare multiple lenders. Prequalifying won't your credit score. But once you formally apply, the lender will perform a hard credit pull that can temporarily lower your score by a few points.

Here are several installment loans you may want to explore.

• Personal loans: Personal loans are usually unsecured, but some lenders offer secured personal loans. You can use a personal loan to pay for just about any expense.
• Auto loans: Auto loans are used to purchase vehicles. The car serves as collateral on the loan, which the lender can repossess if you fail to make your payments.
• Mortgages: Mortgages or home loans are designed to help you purchase a home and are secured by the home itself. If you default on your mortgage, the lender could foreclose.
• Private student loans: Private student loans are unsecured loans you can use to cover educational expenses, like college or trade school.

Where can I get an installment loan?

There are a few places you can turn to for an installment loan, including:

• Online lenders: Many online lenders let you apply for an installment loan online. They may also be more flexible than banks and credit unions. If you have bad credit, you’ll likely have more luck getting approved for an installment loan through an online lender.
• Banks: If you already have a relationship with a bank you like, you may be able to look there. But you might need solid credit and sufficient income to qualify.
• Credit unions: You must join a credit union to take out an installment loan there, but you might be able to lock in a lower rate than with a bank, as credit unions are nonprofit organizations.

Learn more: Where can I get a personal loan?

How to get an installment loan with bad credit

It’s difficult to get an installment loan with bad credit, but it’s certainly possible. These steps can increase your chances of getting approved for an installment loan with a lower credit score.

1. Apply with a cosigner: If you have a friend or family member with good or excellent credit, you might be able to add them to your loan application as a cosigner. Keep in mind that your cosigner is responsible for your payments if you default.
2. Choose a secured loan: Secured loans typically have higher borrowing limits, but, unlike an unsecured loan, collateral is required. If you own a house or a car, for example, you might want to take out a secured loan that uses one of these assets as collateral.
3. Improve your credit: Before you apply for an installment loan, it’s best to improve your credit score. Pay your bills on time, keep old credit accounts open, and dispute any errors you find on your credit reports. You can visit AnnualCreditReport.com for a free credit report.
4. Lower your debt-to-income ratio: Your debt-to-income ratio, or DTI, is all your monthly debt payments divided by your gross monthly income. A lower DTI can help you qualify for an installment loan. Most lenders usually prefer borrowers with a DTI of less than 36%. Anything over 50% means you may have difficulty managing your debts, and the lender may limit your borrowing options. You can reduce your DTI by paying down debt and increasing your income.

Learn more: What credit score do I need for a personal loan?

Best installment loans FAQ

What is a personal installment loan?

A personal installment loan allows you to repay your debt in installments over a set term. It can be either unsecured or secured and tied to collateral, which is a valuable asset you own. You can use a personal loan to cover a wide range of expenses, including home repairs and renovation, car repairs, debt consolidation, vacations, events, and large purchases.

Where can I get an installment loan with bad credit?

Online lenders may offer installment loans for borrowers with bad credit. If you apply with a cosigner, choose a secured loan, or improve your credit score first, you can increase your chances of getting approved.

What happens if you pay off an installment loan early?

If you repay an installment loan, you may save a lot of money on interest. Most lenders don't charge a penalty for prepayment, but it's worth confirming that yours doesn't before paying off your loan early.

Read more:

• How to get a personal loan
• How does a personal loan affect credit score?
• Average personal loan interest rates
• Best personal loan rates
• Best personal loans
• Best emergency loans