Installment loans are worth it if the APRs, payoff periods and loan amounts are better than what your other options offer. Additionally, you should consider getting an installment loan only if you know you can pay it off on time and if your expense is necessary.
When Installment Loans Are Worth It
If other options aren't better
If you have good or excellent credit, you may be able to get a better APR on an installment loan than a credit card. But plenty of credit cards offer 0% introductory APRs, so if you need to make a relatively small purchase that you can pay off before the regular APR takes effect, a credit card may be better for you.
You may also be able to get a loan from a friend or family member. They could offer you more flexible terms than a major lender would.
If you know you can pay it off
Installment loans can take anywhere from a few months to 30 years to pay off, depending on the type of installment loan. You need to make sure that you can afford your monthly loan payments, along with other monthly expenses.
If you choose to get a personal loan, you can see how much your monthly payments will be with the free personal loan calculator on WalletHub.
If the expense is necessary
You may be able to use an installment loan to pay for things like a wedding or vacation. But it's better to use money you've already saved to pay for luxuries.
Installment loans can also be used for many necessary purposes, from financing home improvements to consolidating debt to paying medical bills. Some installment loans have a specific purpose, too. For example, you can only use an auto loan to finance the purchase of a new or used car.
In the end, an installment loan is worth it if the interest rate and fees are better than the alternatives and if you can afford to make monthly payments. To see some of the top-ranked offers, check out WalletHub's picks for the best installment loans. Then, you can estimate your rates from multiple lenders with the free pre-qualification tool on WalletHub.
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