An installment loan is a fixed amount of money that you receive in one lump sum and then repay in equal portions at regular intervals, which are known as installments. There are many different types of installment loans, from mortgages to personal loans. Some installment loans can only be used for one specific purpose, while others can be used for anything.
On the other hand, credit cards and lines of credit are not installment loans. They are types of revolving credit, since neither the amount borrowed nor the resulting monthly payments are predetermined.
Types of Installment Loans
Bear in mind that each type of installment loan is a bit different, with unique fees, interest rates and other features. Learn more about the different types of installment loans.
Best Installment Loans in December 2022
|Company||APR||Loan Amounts||Term Length|
|LightStream||5.99% - 22.49%||$5,000 - $100,000||24 - 84 months|
|Upstart||5.35% - 35.99%, typically||$1,000 - $50,000||36 , 60 months|
|Best Egg||7.99% - 35.99%||$2,000 - $50,000||Up to 60 months|
|SoFi||7.99% - 23.43%||$5,000 - $100,000||24 - 84 months|
|Payoff||7.99% - 29.99%||$5,000 - $40,000||24 - 60 months|
|Marcus||6.99% - 24.99%||$3,500 - $40,000||36 - 72 months|
|Discover||5.99% - 24.99%||$2,500 - $35,000||36, 48, 60, 72 or 84 months|
|FreedomPlus||7.99% - 29.99%||$5,000 - $50,000||24 - 60 months|
|LendingPoint||7.99% - 35.99%||$2,000 - $30,000||24 - 72 months|
To qualify for an installment loan with no origination fee, you need to have a credit score of at least 660. Check out our complete list of the best installment loans to learn more. WalletHub can also help you check if you’re pre-qualified for the best loans.
Pros and Cons of Installment Loans
Installment loans are a very common way to borrow, but they have both advantages and drawbacks.
Pros of Installment Loans
- Make it possible to pay off big purchases over time
- Have consistent monthly payments
- Cover a wide range of needs with different types of loans
- Can be paid off early, usually with no penalty
Cons of Installment Loans
- Only allow one-time borrowing, while revolving credit allows borrowing on demand
- May require collateral
- May charge fees, such as origination fees to open personal loans or mortgage closing costs
- Cost more in interest the longer they last
The full range of available rates varies by state. The average 5-year loan offered across all lenders using the Upstart platform will have an APR of 24.83% and 60 monthly payments of $26.36 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $15,817 including a $594 origination fee. APR is calculated based on 5-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($2,100), MA ($7,000), NM ($5,100), OH ($6,000).