LightStream is the best installment loan for people with excellent credit, while Upstart is the best loan for people with bad credit.
Installment loans are the most common types of loans. These loans offer a lump sum you repay monthly for a set term. They come in various forms, including mortgages, auto loans, personal loans and student loans. The greatest benefits are that they offer a way to get funds to complete important purchases, allow you to repay your debt steadily, know what you’ll owe each month and when you’ll pay it off, and have a clear understanding of the total loan cost over its lifetime. If you’re looking for general installment loans you can use for various purposes — such as debt consolidation or home improvements — review Benzinga’s list of leading installment loans and what they are best for.
Quick Look: Best Installment Loans
- Best for Applicants with Excellent Credit: LightStream
- Best for Bad Credit: Upstart
- Best for No Fees: Citi
- Best for Online Lender: SoFi
- Best for Debt Consolidation: LendingClub
The 5 Best Installment Loans
The best installment loans offer low origination fees, friendly customer service, favorable terms, flexibility to accept those with lower credit scores or unique income, and low total loan costs. Based on our research, here’s your guide to the leading options.
Best for Applicants with Excellent Credit: LightStream
You’ll need good to excellent credit to qualify for a loan through LightStream. But if you can qualify, the company offers superb rates at 8.89-24.29%. Origination fees are competitive at 3-8% of the total loan amount.
You can get funding the same day as long as you complete the process by 2:30 p.m. Eastern time, which is great when you’re in a tough spot and need the funds.
The company charges no additional fees other than the origination fees, which can make the loan option more affordable throughout the loan.
While the company is great for those who qualify, the largest setback is that prequalification requires a hard credit check, so you’ll need to be confident you can qualify and that the loan meets your needs before applying.
Loan amounts range from $5,000 to $100,000, so these loans are not ideal for those who need just a few thousand dollars to get by.
Why We Love It: With no fees outside of the origination fees and fast funding, LightStream is an excellent choice for individuals with good to excellent credit due to the low rates you can get with the company.
Best for Bad Credit: Upstart
In contrast to LightStream, which is an excellent choice for those with excellent credit, Upstart is a great choice for those with bad credit. You can qualify with credit as low as 300. Loan amounts go as low as $1,000, making it a good option when you need extra cash to get by or meet unexpected expenses.
Select from loan terms of 3-5 years and get APR as low as 7.80%, though those with poor credit will pay at the higher range of 35.99%.
Despite the low credit score threshold for an Upstart loan, you’ll still need to meet various qualification requirements. You must be 18 years of age, have a full-time job or job offer, a U.S. bank account, and have had no bankruptcies within the last 12 months.
Fees are higher than those of some other lenders since Upstart is willing to take some risks on individuals with lower credit. The loan origination fee can be as high as 12%. Late payments result in the greater of 5% of the past due bill or $15. Get funding as quickly as the next business day.
Why We Love It: Those with bad credit have few options for getting a loan. Upstart’s credit score requirement of 300 or more makes loans accessible to those with limited credit history or a few financial mistakes.
Best for No Fees: Citi
Fees and penalties can seriously increase the cost of your loan. However, Citi offers loans with no fees and allows you to get your funds within two business days of accepting your loan. Enjoy a fixed rate APR of 11.49%-20.49%. Get a loan of $2,000-$30,000 with up to 60 months of repayment terms.
Another nice perk Citi offers is a rate reduction for automatic payment enrollment. You can check your rate without impacting your credit score. To qualify, though, you will need a good credit score or higher.
Why We Love It: No origination fee significantly reduces your loan’s cost. But you also won’t face late fees or hidden fees. Pay off your loan early without any penalties to further reduce the cost of your loan.
Best for Online Lender: SoFi
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Best For:
No origination fees
securely through SoFi Personal Loans’s website
Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.
Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
SoFi offers many great loan features, including lower credit score requirements. You’ll need a credit score of 670 or higher to qualify, but that’s good news for those working to improve their financial standing by consolidating debt or building their credit with on-time payments. You’ll also need to prove employment or pending employment.
If you approve your loan by 7 p.m. Eastern time, you can enjoy same-day funding. SoFi offers loans up to $100,000 with terms as long as seven years. Another benefit is the option to apply with a co-borrower, which can improve your chances of qualifying.
Why We Love It: SoFi is known for being a flexible lender with options that meet various needs. Including a co-borrower is also unique for lenders in this category.
Best for Debt Consolidation: LendingClub
LendingClub offers $1,000-$40,000 loans, making it ideal for debt consolidation. Plus, you don’t have to have stellar credit to qualify. The lender takes borrowers with credit as low as 600. Select from a variety of term lengths, from 24 to 60 months.
Compared to other lenders on this list, you will need to allow a little more time for funding. It can take a few business days after approving the loan to get the funds. You can go through the prequalification process without a hard credit check. LendingClub also offers the option for co-borrowers, which could help those with lower credit get better rates by combining income to qualify for a better loan.
One setback to LendingClub is that it charges 3-8% origination fees. Its APR is also higher than some other lenders, but that’s not surprising given that the company works with those with fair credit.
Why We Love It: LendingClub will send payments directly to creditors, making this a great option for debt consolidation. With lower credit score requirements, loans from LendingClub are accessible to more people.
How to Choose
Once you know what loan type you want, you’ll need to compare them against one another. Here’s how to do that.
- Request your credit report: Work with one of the major credit bureaus to get a copy of your credit report. Review the information there to see your credit score, whether you have delinquent payments, and whether your total debt amount is high. These are all important factors in whether you’ll qualify for a new loan. If your credit score is low, work to fix the delinquent payments and lower your credit utilization ratio and debt-to-income ratio.
- Check your budget: You want to know what monthly payment you can realistically afford with your new loan. If you take on a payment you can’t afford, this can do serious harm to your finances and ability to repay the loan. You’ll damage your credit and overextend your finances. Make sure your debt-to-income ratio is below 36%. That means you don’t owe more than 36% of your income to other obligations, such as required credit card payments, mortgage payments, student loans, etc. If your debt-to-income ratio exceeds 36%, you’ll need to pay down your existing debt before any lender approves you for a loan.
- Learn the loan qualification criteria: The best lender for you will depend on your personal finances and qualification factors. Each lender will have its own criteria and judge your finances based on them. Most lenders offer installment loans, so you have many options; you just need to find the company with the best terms and rates. If your credit is not optimal, consider a personal loan for bad credit.
- Compare terms: Each loan and lender will have varying terms. Review the fees, whether the lender charges prepayment penalties and options for the loan duration. The fees and prepayment penalties will impact the total cost of the loan and are important factors in determining the best loan for you.
- Complete prequalification to review and compare rates: Most lenders provide prequalification where you can enter some basic financial details and view rates before the lender completes a hard credit pull, which can impact your credit score for a few months. Try to prequalify with three lenders so you can compare rates and terms. If the rates are similar for all lenders, look for the option that provides the best features, such as autopay discounts, allowing you to select your payment date, grace periods in case you miss a payment, etc.
How to Get An Online Installment Loan
The process of getting an online installment loan is simple, though gathering the required documents and materials might take some time. Here’s what to expect.
1. Prequalify for Loans
Work with lenders that offer prequalification to learn your rates and terms. This will help you understand whether the loan will fit in with your monthly budget and if it is realistic for you to make the monthly payments.
2. Provide Additional Documents as Required
Once you get past prequalification, you’ll need to provide documentation for your financial state to prove the details to the lender. This involves uploading documents, such as pay stubs or tax data. Be responsive to your lender throughout the loan process to keep your loan moving smoothly.
3. Review Final Loan Details
Ensure your loan terms stay the same between prequalification and final approval. Sometimes, discrepancies between your initial loan details and financial documentation can lead to changes in terms.
4. Accept the Loan Offer
Once you accept the loan, you’ll likely receive your money within a few business days. Now, you’ll need to start making consistent monthly payments to avoid long-term impacts on your credit.
Installment Loans for Bad Credit
Although lenders prefer borrowers with good and excellent credit scores, those with fair or bad credit can still find an installment loan. Here’s how to get a loan when your credit is not optimal:
- Dedicate time to improving your credit score: If immediate access to a loan isn’t necessary, consider improving your credit score. While you won’t see immediate results, making on-time payments, reducing your credit utilization below 30% and lowering your debt-to-income ratio will gradually improve your score.
- Evaluate lenders offering bad-credit loans: Some lenders specialize in loans for those with poor credit. Due to increased risk, these loans often come with higher fees and interest rates.
- Consider secured loans: Individuals with bad credit but ample assets can get a secured loan. These loans allow you to use items you own, such as your home or car, as collateral. That way, the loan is less risky for the lender. However, it can be more dangerous because if you fail to make payments, the lender can seize the item you put forth as collateral.
Where to Find an Installment Loan
Installment loans are available from various sources and locations. Here’s a look at the most common.
- Banks: Whether national or local, banks of all sizes offer installment loans. However, the qualification criteria will likely be quite stringent.
- Credit unions: These are more flexible with loans and can work with various individuals and financial situations for loans.
- Online lenders: You can find online lenders that provide installment loans for bad credit. These lenders can help you qualify for a loan even if your finances are not the best. Online lenders can also provide borrowers with a seamless customer service experience because they have some of the best technology.
Alternatives
Because installment loans cover many loans, you only have a few alternative options.
- Ask friends or family for help: Borrowing money from friends and family can make for complex relationships. But it never hurts to ask if you only need a small amount and know someone with the financial means to help. If you do go this route, write down the agreement you come up with so that everyone knows what to expect and they are accountable. This can be a great way to get the money you need with far less — or no — interest and fees on the loan.
- Sign up for a 0% APR credit card: Many credit cards offer an introductory 12-15-month period where the money you spend in the first few months of opening the account won’t accrue interest. This is a great option if you can pay off the expense in the first year of opening the card. If not, you’ll pay extremely high interest rates once the introductory period ends, making this a less attractive option.
The Easiest Loan Type to Budget for
The greatest benefit of using an installment loan is that it is easy to budget for. You’ll know your monthly payments with certainty and the maximum amount of time you’ll be paying on the loan — though you could make additional payments to pay off the loan early and save on some of the fees. Review whether an installment loan might meet your financial requirements and get prequalified to begin your loan process.
Frequently Asked Questions
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The easiest installment loan to get is a secured loan because you won’t need to meet credit score or income requirements since you’ll be putting forth collateral. But these can also be risky loans since they don’t have these same requirements.
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Mortgages, auto loans and student loans are the most common installment loans. Personal loans are also popular but not quite as common.
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Applying for an installment loan might reduce your credit for a few months. But if you make on-time payments and keep your debt-to-income ratio below 36%, the loan should not have long-term implications.
