Grace Enfield, Content Writer
An installment loan is good to have because it can help you build credit and it can be used for many different things, like home improvements or buying a car. Installment loans also can help you spread out the cost of a large expense over time, with repayment periods as long as 30 years depending on the type of loan you get.
Why an Installment Loan is Good
Can help you build credit
If you make your payments on time, the lender will report positive information to the credit bureaus. This means your credit score will increase, assuming negative information from other sources isn’t added. Additionally, since your credit score is partially based on the types of accounts you own, your score will get a boost if you have a healthy mix of installment and revolving credit.
To see how an installment loan might affect your credit score, check out the free credit score simulator on WalletHub.
Has many purposes
There are a number of ways you can use an installment loan, such as financing home improvements, consolidating debt or paying for expensive purchases over time. Some installment loans have a specific purpose, though, like car loans only being used to finance the purchase of a new or used car.
Offers long repayment periods
Depending on the type of installment loan, you could get a repayment period lasting years or even decades. This gives you plenty of time to repay what you owe.
Can be paid off early
Most lenders will let you pay off your installment loan early, often without penalty. This could save you money on interest.
Has predictable payments
Installment loan payments are typically made in equal amounts on the same day every month. This makes it easy to plan for these payments in your monthly budget.
Now that you know why an installment loan is good, you can start comparing your options. To see the top-ranked offers, check out WalletHub’s picks for the best installment loans. You can also estimate your personal installment loan rates with our free pre-qualification tool.
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