Installment Loans in USA Explainer April 2024

Personal installment loans are a type of loan that allows borrowers to pay back a fixed amount of money in installments, usually it is monthly payment, until the entire loan amount is repaid. This type of instalment loan is particularly popular among borrowers who do not want to pay a lump sum upfront or cannot afford to do so.

In this article, we will discuss everything that you need to know about installment loan, including the criteria we used to choose the best lenders, how to spot scams, and the pros and cons of using these personal loans.

When is an installment loan a good idea?

An installment loan can be a good idea in various situations, depending on individual financial needs and circumstances. Here are some instances when an installment loan can be a favorable choice:

  • Consolidating Debt
  • Emergency Expenses
  • Building Credit
  • Large Purchases
  • Fixed Interest Rates
  • Educational Expenses
  • Business Ventures
  • Wedding Expense

In each of these scenarios, it's essential to carefully assess your financial capacity to repay the loan, compare lenders, and read the terms and conditions thoroughly. Responsible borrowing and prompt repayments are crucial to maximizing the benefits of an installment loan and ensuring it remains a good financial decision.

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One of the significant advantages of installment loans is the structured repayment schedule. Borrowers know exactly how much they need to pay each month, making budgeting and financial planning more manageable.

Installment loans often come with fixed interest rate, providing stability and predictability in monthly payments. This allows borrowers to avoid fluctuations in interest rate and ensures their payment remains the same throughout the loan term.

Installment loans typically offer higher borrowing limits compared to other short-term loans, allowing individuals to access larger sums of money for major expenses, such as home improvements or debt consolidation.

Where can I get an installment loan?

Traditional banks and credit unions are common sources for installment loans, offering both secured and unsecured options.

Online lenders have become increasingly popular for their convenience and accessibility, providing installment loans with a streamlined application process.

Additionally, some specialized lenders focus on providing installment loans for specific purposes, such as home improvements or debt consolidation.

Find the Best Personal Loans for You
  • Start by evaluating your credit score, as it will impact the loan options available to you.
  • Research and compare multiple lenders, both traditional banks and online platforms, to find the most competitive interest rates, fees, and loan terms.
  • Look for lenders that offer flexibility in repayment options and provide clear information about their loan products.

By taking the time to assess different personal loan offers and considering your individual financial situation, you can find the best personal loan that suits your needs and helps you achieve your financial goals.

How to choose the best lender

Selecting the right lender is a crucial step in obtaining a loan or credit product that aligns with your financial needs and goals. With numerous lenders available, it's essential to conduct thorough research and make an informed decision.

In this tutorial, we will walk you through the steps to choose the best lender, ensuring you secure the most favorable terms and a smooth borrowing experience:

Step 1: Assess Your Financial Needs Determine the specific financial requirements for your loan or credit product. Consider the loan amount, repayment term, interest rate, and any additional features you need. Understanding your needs will help you narrow down lenders that offer suitable options.

Step 2: Research Different Types of Lenders Explore traditional banks, credit unions, online lenders, and peer-to-peer platforms. Take note of their reputation, customer reviews, and available loan products. Each type of lender has its own advantages and disadvantages.

Step 3: Compare Interest Rates and Fees Compare interest rates and fees from different lenders. Lower interest rates mean lower borrowing costs over time, so find a lender with competitive rates. Also, be wary of hidden fees that may impact the overall cost of the loan.

Step 4: Check Eligibility Criteria Verify if you meet the lender's eligibility requirements for the loan product you want. Some lenders have specific criteria related to credit scores, income, or employment status. Choose a lender where you are likely to qualify based on your financial profile.

Step 5: Evaluate Customer Support and Reviews Research the lender's reputation and customer service. Read reviews and testimonials from previous borrowers to gauge their satisfaction with the lender's services. Opt for a lender known for transparency, professionalism, and excellent customer support.

By following these 5 simple steps and conducting thorough research, you can find a lender that offers favorable terms, competitive rates, and exceptional customer service. Take your time, compare options, and make a well-informed decision to ensure a positive borrowing experience.

Online lenders


  • Online lenders offer a quick and straightforward application process that can be completed from the comfort of your home, saving time and effort.
  • They typically provide fast funding, allowing borrowers to access funds quickly for urgent financial needs.
  • They often have lower overhead costs compared to traditional banks, which can lead to more competitive interest rates and fees.
  • With numerous online lenders available, borrowers have access to a wide range of loan options, allowing them to find the most suitable terms for their specific needs.


  • Limited in-person support compared to traditional brick-and-mortar banks, which could be challenging for borrowers who prefer face-to-face interactions.
  • Submitting personal and financial information online may raise security concerns for some borrowers, making them wary of potential data breaches or identity theft.
  • The level of customer service offered by online lenders can vary, and some borrowers may encounter challenges if they need assistance or have inquiries during the loan process.

Happy Money: Best for credit card debt consolidation

Happy Money is a financial technology company that offers innovative solutions for credit card debt consolidation, making it an excellent choice for those seeking to manage and eliminate credit card debt effectively.

With a focus on promoting financial well-being and happiness, Happy Money provides personalized options to consolidate credit card balances into a single, manageable loan with favorable terms.

By consolidating credit card debt, borrowers can potentially secure lower interest rates and a structured repayment plan, making it easier to stay on track towards becoming debt-free.

Happy Money's commitment to empowering individuals to take control of their finances and improve their financial health makes it a top option for credit card debt consolidation.

LightStream: Best for large loan amounts

LightStream is a leading online lender known for providing the best options for large loan amounts. As a division of Truist, LightStream offers competitive interest rates and flexible loan terms, making it an attractive choice for borrowers in need of substantial funds.

Whether financing home renovations, major purchases, or consolidating high-interest debt, LightStream's large loan amounts accommodate diverse financial needs. Additionally, the process is streamlined and hassle-free, ensuring a quick and efficient borrowing experience.

With a reputation for excellent customer service and a commitment to meeting borrowers' needs, LightStream stands out as the go-to option for those seeking significant loan amounts with favorable terms and top-notch service.

LendingClub: Best for joint applications

LendingClub is a prominent peer-to-peer lending platform that excels in providing the best options for joint applications. With LendingClub, borrowers have the opportunity to apply for a loan together, combining their incomes and creditworthiness to enhance their chances of approval and secure more favorable loan terms.

Joint applicants can access larger loan amounts and potentially qualify for lower interest rates, making it an ideal choice for couples or individuals seeking financial assistance together.

LendingClub's user-friendly online platform and efficient application process make it easy for joint applicants to navigate and access the funds they need. With a focus on empowering borrowers through joint applications, LendingClub stands as a top choice for those looking to achieve their financial goals as a team.

APR range

The APR range varies based on factors such as the borrower's creditworthiness, loan amount, and repayment terms. Lenders provide an APR range to give borrowers a better understanding of the potential interest they could pay on an APR loan.

Understanding the APR range empowers borrowers to compare loan offers effectively, make informed decisions, and choose the most cost-effective financial option that aligns with their specific needs and financial circumstances.

Here’s the criteria we assessed to choose the best Installment Loans lenders:

  • Interest rate
  • Loan amount
  • Loan duration
  • Repayment term
  • Approval time
  • Customer service
  • Additional fees and charges
  • Transparency

Based on these criteria, we have compiled a list of the best installment loan lenders in the USA

One Main Financial:

  • Loan amount: $1,500-$20,000
  • APR range: 18.00% - 35.99%
  • Loan duration: 2-5 years
  • Repayment term: Monthly
Offers secured and unsecured loans

Best Egg:

  • Loan amount: $2,000-$35,000
  • APR range: 5.99% - 29.99%
  • Loan duration: 3-5 years
  • Repayment term: Monthly

No prepayment penalties


  • Loan amount: $1,000-$50,000
  • APR range: 6.86% - 35.99%
  • Loan duration: 3-5 years
  • Repayment term: Monthly

Allows you to apply with a co-signer


  • Loan amount: $2,000-$35,000
  • APR range: 9.95% - 35.99%
  • Loan duration: 2-5 years
  • Repayment term: Monthly

Offers loans to people with lower credit scores

Lending Club:

  • Loan amount: $1,000-$40,000
  • APR range: 8.05% - 35.89%
  • Loan duration: 3-5 years
  • Repayment term: Monthly

No prepayment penalties

How to spot scams for Installment Loan:

  • Look out for best personal loans that require upfront payments or fees
  • Avoid lenders who do not have a physical address or phone number
  • Research the lender's reputation and read user reviews
  • Be wary of promises of guaranteed approval or loans with no credit check

Pros and Cons of Installment Loans


  • Fixed interest rates and predictable monthly payments
  • Longer repayment terms allow lower monthly payments
  • Can be used for a variety of purposes, such as debt consolidation, home improvement, and unexpected expenses


  • Can be more expensive than other types of loans, especially if you have low credit score
  • Longer repayment terms mean paying more in interest over time
How an installment loan affects your credit

An installment loan can significantly impact your credit in both positive and negative ways, depending on how you manage the loan. Here's how an installment loan affects your credit:

Establishing Credit History. If you have a limited credit history or no credit history at all, taking out and successfully repaying an installment loan can help establish a positive credit history. Timely payments demonstrate to lenders that you are a responsible borrower, which can improve your credit score.

Building Credit. Consistently making on-time payments on your installment loan can positively impact your credit score over time. A history of responsible borrowing and repayment shows lenders that you are a low-risk borrower, potentially leading to better credit opportunities in the future.

Mix of Credit Types. Having a diverse mix of credit types, such as a combination of credit cards and installment loans, can positively influence your credit score. This demonstrates your ability to manage different types of credit responsibly.

Credit Utilization. Installment loans can help improve your credit utilization ratio, which is the amount of credit you're using compared to your total available credit. As you pay down the loan principal, your credit utilization ratio decreases, positively affecting your credit score.

Late or Missed Payments. Failing to make timely payments on your installment loan can have adverse effects on your credit. Late payments can result in penalties, and if reported to credit bureaus, they can lower your credit score and stay on your credit report for up to seven years.

High Debt-to-Income Ratio. Taking on too many installment loans or other debts relative to your income can negatively impact your creditworthiness and may raise concerns for lenders.

Closing Accounts. Closing an installment loan account prematurely may also have a negative impact on your credit. Keeping the account open and continuing to make on-time payments can help maintain or improve your credit score.

An installment loan can significantly impact your credit in both positive and negative ways. When you apply for an installment loan, the lender will perform a credit check, which may result in a temporary dip in your credit score. However, if you are approved and make timely payments, your credit score can improve over time.

What happens if I default on an installment loan?

Consistently paying your installment loan on schedule demonstrates responsible financial behavior to credit bureaus, positively affecting your payment history and credit utilization. On the other hand, missing payments or defaulting on the loan can severely damage your credit score and make it harder to qualify for future loans.

Failure to make timely payments can damage your credit score

In conclusion, installment loan can be a useful tool for borrowers who need flexibility in their repayment terms. However, it is important to do your research before thу process and choose a reputable lender to avoid scams and high fees.

Take the time to understand the terms of your loan, including the minimum credit score requirements, and make timely repayments to avoid damaging your good credit score.

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How application process works

  • Fill our simple form of your best personal loans
  • Fill out one easy form of loan and your inquiry will be submitted to our large network of lenders. Loan amounts range from $100 to $5,000
  • Receive different personal installment loan offers
    Receive and review different loan offers and loan terms

  • Review & accept your loan offer that best suits your need
    Select and accept a loan that works for you.

  • Money is deposited directly
    The funds are usually deposited within 1 business day.

Do installment loans require a credit check?

In most cases, installment loans require a credit check as part of the application process. Lenders use the credit check to assess the borrower's creditworthiness and determine the level of risk associated with lending to them.

A credit check helps lenders evaluate the borrower's credit history, payment history, outstanding debts, and other financial factors to make an informed decision on whether to approve the loan and set the terms, including the interest rate and loan amount.

What are the most common types of installment loans?

  • Personal installment loan is one of the most prevalent type, offering borrowers a lump sum that can be repaid over time in fixed installments.
  • Auto loan is another common installment loan, specifically designed for financing the purchase of vehicles.
  • Mortgages are long-term installment loan used to fund the purchase of real estate, allowing borrowers to pay back the loan over several years.
  • Federal student loans are also widespread, providing financial support to students pursuing higher education, with various repayment options available.
  • Additionally, home improvement loans, debt consolidation loans, and small business loans are other types of installment loans frequently used by individuals and businesses.

Loan amounts

Loan amounts vary depending on the type of loan and the borrower's creditworthiness. Unsecured loans, such as personal loans, typically offer loan amounts ranging from a few hundred dollars to tens of thousands, depending on the lender's terms and the borrower's financial profile.

Auto loans, designed for financing vehicle purchases, can extend from several thousand dollars to over $100,000, depending on the car's cost and the borrower's ability to repay.

Credit builder loans, on the other hand, are tailored to help individuals with limited or poor credit history build or improve credit score. These loans often have smaller loan amounts, usually ranging from a few hundred to a few thousand dollars, providing borrowers with an opportunity to establish a positive credit history through regular, timely loan payments.

Best installment loans of 2023

As of 2023, several lenders in the USA offer some of the best installment loans with competitive terms and favorable interest rates. When considering the best installment loans of 2023, it's important to prioritize lenders that offer transparency, flexibility, and excellent customer service.

Online lenders have continued to gain popularity due to their user-friendly platforms and streamlined application processes. Many of these lenders offer installment loans with quick funding and a straightforward online application, making them convenient options for borrowers seeking fast access to funds.

The best installment loans of 2023 are likely to come from lenders that prioritize responsible lending practices and transparent terms.

How to Find Installment Loans with Good Interest Rates

Finding installment loans with good interest rates in the USA requires a strategic approach and careful evaluation of various lenders and loan options. Start by checking your credit score, as a higher credit score generally qualifies you for more favorable interest rates. Next, research multiple lenders, including traditional banks, credit unions, and online lenders, to compare their loan offerings. Look for lenders that explicitly mention competitive interest rates and transparent terms.

Reading customer reviews can provide insights into the lender's reputation and customer service. Consider the loan amount and repayment term that best suits your financial needs, ensuring that you can comfortably manage the monthly payments. Additionally, some lenders offer rate-matching guarantees, where they will match or beat the interest rates offered by competitors.

By comparing multiple lenders, considering your creditworthiness, and negotiating when possible, you can find installment loans with good interest rates that align with your financial goals and budget.

Can You Get an Installment Loan With Bad Credit?

In the USA, it is possible to get an installment loan even with bad credit history. Many lenders in the country offer installment loans specifically designed for individuals with less-than-perfect credit scores.

These lenders take into consideration various factors beyond just the history when assessing a borrower's eligibility, such as income, employment stability, and debt-to-income ratio.

While borrowers with bad credit may face higher interest rates and stricter terms, successfully obtaining an installment loan can still be a viable option to meet financial needs and improve history of credits through responsible and timely loan payments.

High-interest installment loans for bad credit

High-interest installment loans for bad credit in the USA are financial products specifically designed for individuals with poor credit score who may struggle to qualify for traditional loans.

These installment loans allow borrowers to access funds quickly, but they come with substantially higher interest compared to standard loans. Lenders justify the higher rates due to the increased risk they assume when lending to individuals with bad credit histories.

While these loans can provide a lifeline for those in need of immediate funds, borrowers should exercise caution and carefully assess their ability to meet the repayment terms.

Failing to make timely payments on high-interest installment loans can lead to a cycle of debt, exacerbating the already challenging financial situation for individuals with bad credit.

Alternatives to bad-credit installment loans

Individuals with bad credit seeking alternatives to installment loans can explore other borrowing options. Secured loans, where collateral is used to secure the loan, may be available to borrowers with bad credit:

  • Secured Loans
  • Payday Alternative Loans (PALs)
  • Peer-to-Peer Lending
  • Family or Friends
  • Credit Counseling
  • Secured Credit Cards
  • Government Assistance Programs

When exploring alternatives to bad-credit installment loans, it's crucial to conduct thorough research, compare terms, and consider the impact on overall financial health. Responsible borrowing and timely repayment are essential to rebuilding credit and achieving long-term financial stability.

Alternatives to installment loans

There are several alternatives to installment loans available in the USA.

Personal Lines of Credit. Similar to credit cards, personal lines of credit allow borrowers to access a predetermined credit limit. Borrowers can withdraw and repay funds as needed, only paying interest on the amount used.

Payday Loans. Payday loans are short-term loans typically due on the borrower's next payday. While they offer quick access to funds, they often come with high-interest and should be used cautiously.

Credit Cards. Credit cards provide a revolving line of credit that borrowers can use for various purchases. They offer flexibility, but borrowers should be mindful of high-interest and potential debt accumulation.

Home Equity Loans or HELOCs. Homeowners can consider borrowing against the equity in their property through home equity loans or home equity lines of credit. These loans often come with lower interest and can be used for larger expenses.

Secured Loans. Borrowers can consider secured loans where they provide collateral, such as a car or savings account, to secure the loan. Secured loans may offer more favorable terms for individuals with lower credit scores.

Peer-to-Peer Lending. Online platforms connect borrowers directly with individual lenders, potentially offering more flexible terms and rates compared to traditional lenders.

Government Assistance Programs. Some government programs provide financial assistance to individuals in need, such as housing or education loans.

It's essential to carefully research and consider the terms, interest, and repayment plans of these alternatives before choosing the best option that fits your financial needs and goals.

What to choose: Installment loans vs. payday loans

Choosing between installment loans and payday loans depends on your specific financial needs and goals. If you need to borrow a larger sum of money and prefer a structured repayment plan with fixed monthly payments, an installment loan might be the better choice. It allows you to consolidate debt and manage your finances more effectively with lower interest rates.

However, if you require a smaller amount for a short-term emergency and can repay it on your next payday, a payday loan could provide quick access to funds. Keep in mind that payday loans often come with higher interest rates, which can lead to a cycle of debt if not managed carefully.

While both options offer quick access to funds, borrowers should carefully consider their financial situation and ability to repay before choosing between installment loans and payday loans.

Credit unions

Credit unions prioritize the well-being of their members over profits, setting them apart from traditional banks. This customer-centric approach often results in competitive interest rates on savings accounts, loans, and credit cards, benefiting members.

To join a credit union, individuals typically need to meet specific eligibility criteria, such as belonging to a specific employer group, community, or organization.

Once a member, they can access a wide range of financial products and services tailored to their unique needs, further enhancing the appeal of credit unions as customer-focused financial institutions.

How it works

  • Fill our simple form
    Fill out one easy form and your inquiry will be submitted to our large network of lenders. Loan amounts range from $100 to $5,000
  • Receive different loan offers
    Receive and review different loan offers and terms
  • Review & accept your loan offer that best suits your need
    Select and accept a loan that works for you.
  • Money is deposited directly
    The funds are usually deposited within 1 business day.

Installment Loans in USA Explainer Video


  • 1. What is an installment loan?
    An installment loan is a type of a secured loan where the borrower receives a lump sum of money and agrees to repay it in fixed, equal installments over a predetermined period of time, usually ranging from a few months to several years.
  • 2. What types of installment loans are available in the USA?
    There are several types of installment loans available in the USA, including personal loans, auto loans, student loans, and home equity loans.
  • 3. How do installment loans work?
    Installment loans work by providing borrowers with a lump sum of money that is repaid over time through a series of scheduled payments, known as installments. Once approved, the borrower receives the loan amount, and the repayment process begins. Each installment includes a portion of the principal amount borrowed and the accrued interest, with the total number of installments determined by the loan term.
  • 4. How much can I borrow with an installment loan?
    The amount you can borrow with an installment loan varies depending on the lender, your credit score, and other factors. Generally, borrowers can receive anywhere from a few hundred to several thousand dollars.
  • 5. How long does it take to receive an installment loan?
    The time it takes to receive an installment loan depends on the lender and the type of loan you are applying for. In some cases, you may be able to receive funds within 24 hours, while other loans may take several weeks to process.
  • 6. What are the eligibility requirements for installment loans, USA?
    The eligibility requirements for an installment loan vary depending on the lender and the type of loan agreement you are applying for. Generally, lenders will consider your credit score, income, employment history, and other financial information when determining your eligibility.
  • 7. What happens if I miss an installment loan payment?
    If you miss an installment loan payment, you may be charged a late fee and your credit score may be negatively impacted. Additionally, some lenders may report missed loan amount of monthly payment to credit bureaus, which can make it more difficult to obtain a good credit in the future.
  • 8. Can I pay off my installment loan early?
    Yes, most installment loans allow for early repayment without monthly payments of penalty. However, it’s important to check with your lender to confirm their specific policies on early repayment.
  • 9.What Are the Current Personal Loan Rates?
    As of the current date, personal loan rates in the USA vary depending on several factors, including the borrower's creditworthiness, loan amount, and repayment terms. On average, personal loan interest can range from around 6% to 36%.
  • 10. What are the Best Installment Loans for Bad Credit?
    Several lenders specialize in offering installment loans to individuals with less-than-perfect credit scores. Online lenders often provide a convenient platform to explore various offers and find lenders willing to work with borrowers with bad credit. Additionally, credit unions offer more favorable terms and personalized assistance to applicants.

Installment Loans rates

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