Best Installment Loans

Lump-Sum Personal Financing Solutions

Updated May 17, 2022

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An installment loan is a loan that enables you to borrow typically between $5,000 and $50,000 and pay it back in monthly installment payments. Term lengths range from three to six years in most cases, but there are a few that last 12 years. These types of loans are also called personal loans and are used for expenses like home improvements, buying a car, consolidating your debt from multiple credit cards, or covering medical expenses, to name a few.

Choose carefully when shopping for an installment loan. They can vary widely with their term lengths, fees, and APRs. In fact, if your credit score is in the low 600s and high 500s, your rate could be as high as 30% or more.

We scrutinized 12 installment loan companies to find the best six that we feel comfortable recommending. We looked into each company’s background, rates, fees, and terms, so we can suggest reputable, lower-cost providers. Read about the six best installment loans to see which ones are the best fit for your needs.

Best Installment Loans of 2022

Best Overall: Marcus by Goldman Sachs
Best for Long Repayment Terms: LightStream
Best for Excellent Credit: Best Egg
Best for Early Repayment Options: SoFi
Best for Bad Credit: Avant
Best for Debt Consolidation: Discover Personal Loans

Best Overall : Marcus by Goldman Sachs

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When it comes to a balance of rates, loan limits, terms, and conditions, Marcus by Goldman Sachs sits above all personal loan competitors.

Pros

Wide variety of repayment term options
Lower interest rates than most lenders
No fees
Option to defer a payment

Cons

Funding can take four days
Maximum six-year loan terms
Only phone customer support available

With lenient requirements and great terms, including no origination, prepayment, or late fees, Marcus by Goldman Sachs earns our nod as best overall for installment loans. Goldman Sachs is one of the most recognizable names in Wall Street’s investment banking sector. The company started offering consumer banking services under the name of Marcus by Goldman Sachs in 2016 and currently offers several financing products, including personal loans.

The loans are available in values from $3,500 to $40,000. Loans from Marcus have a fixed interest rate of 6.99% to 19.99% APR that can be reduced by 0.25% if you sign up for auto-pay. There are no signup fees and no prepayment penalties. The loans are available with repayment terms of 36 to 72 months. Applicants with credit scores in the higher range will qualify for the lowest rates.

Marcus accepts applications from consumers in all 50 states, plus Washington, D.C., and Puerto Rico. There are age requirements, however. You must be over 18 (19 in Alabama, 21 in Mississippi and Puerto Rico), with a valid U.S. bank account and Social Security or Individual Tax I.D. number.

Users of the Marcus by Goldman Sachs app can track their debt and finances.

An added benefit of working with Marcus is that after making 12 consecutive regular loan repayments, users can defer one payment, which means extending the loan term by one month.

Read the full Marcus by Goldman Sachs Review.

Best for Long Repayment Terms : LightStream

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With terms ranging from two to 20 years for home improvement loans and two to seven years for all other loans, LightStream is our top pick for those who want to enjoy favorable loan terms and longer repayment terms.

Pros

Loan terms up to 20 years
No prepayment penalty, origination fee, or late payment fee
Funds in your account as soon as the same day

Cons

The loan must be used for what you selected in the application
The loan can’t be used to fund another LightStream loan or education funding

LightStream has high loan limits to $100,000 that have repayment terms as long as 29 years, winning our best lender with long repayment terms. The company is an online consumer lending division of Truist Bank, one of the leading companies for financial services.

The interest rates provided by LightStream are typically fixed, ranging between 3.99% and 19.99%; if automatic payments are used, they get an additional 0.50% rate reduction. Applicants can get loans between $5,000 and $100,000 with terms ranging between two to 20 years for home improvement loans, two to 12 years for aircraft/RV/boat loans, and two to seven years for all other loans.

One of the most significant upsides is that there are zero prepayment penalties, origination fees, or late payment fees when using LightStream as a lender. However, LightStream requires applicants to be residents of the U.S. and applicants can apply from all 50 states. The loan must be used toward the purpose you select in the application and can’t be used to fund another LightStream loan or education funding.

Other restrictions include:

You can’t get a loan if your income comes from the marijuana industry
No higher education
Loans only made to individuals, not businesses
No cash-out refinance purposes
No loans to buy stocks, bonds, or stock options
No loan can be used toward retirement, life insurance, or education savings plan

More than 21,000 customers have left a 5-star review for LightStream and the average review is 4.9. Most users give it a high score for the easy application, fast funding, and affordability but criticize it for the long approval time.

If you’re unsatisfied with your experience, you can contact LightStream’s customer support to potentially receive a $100 Loan Experience compensation.

Read the full LightStream Personal Loans Review.

Best for Excellent Credit : Best Egg

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If you have an excellent credit score and want to get a personal loan under highly favorable conditions, Best Egg is the company to turn to.

Pros

Low loan minimum amount
No prepayment penalties
High satisfaction rates

Cons

Low loan maximum amount than some other lenders
Caters more towards those with higher credit or better financial situations
Minimum income of $100,000 to qualify for the lowest rates

Those with a solid financial situation and want a highly rated personal loan provider should definitely consider turning to Best Egg.

Best Egg loans were first offered in 2014 with the goal of helping people pay back their debt quickly through programs that fit their lifestyle.

The loan amounts can range from $2,000 to $50,000. APRs can range between 5.99% to 35.99%, which includes both the interest rate and an origination fee of 0.99% to 5.99% of your loan amount. The origination fee on loans with terms longer than four years will be 4.99% at a minimum. The minimum term is 36 months, and the maximum term is 60 months.

Best Egg loans can be repaid at any time without any type of penalty.

Applicants must have a minimum credit score of 700 and a minimum individual annual income of $100,000 to be considered for the lowest rates.

Although the loan minimum is $2,000 for most states, there are some state-specific minimum limitations. Residents of Massachusetts have a minimum loan amount of $6,500, the threshold in New Mexico and Ohio is $5,000, and the minimum in Georgia is $3,000. If you’re applying for a second loan, your total existing loan balance cannot exceed $50,000.

Reviewers on Trustpilot give Best Egg an average of 4.6 out of 5 stars based on over 6,000 reviews. 89% of the reviewers rated Best Egg with 5 stars.

Read the full Best Egg Personal Loans Review.

Best for Early Repayment Options : SoFi

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While many installment loan programs have strict terms and conditions for early repayments, SoFi has zero penalties or fees for early repayments, while offering higher loan amounts than others for up to seven years.

Pros

High loan maximum amount
Zero fees and penalties
Has a mobile app to track and manage your loan

Cons

Higher loan minimum amount than some lenders

Applicants can get loans up to $100,000 with terms up to seven years without having to pay any type of fees or penalties for early repayments, making SoFi our best choice if early repayment options are important to you.

SoFi was founded by Stanford Business School students in 2011 as a way of connecting recent grads with alumni in their community. While they initially started as a student loan refinancing provider, they quickly expanded their services to a wide array of personal loans.

SoFi customers can get loans with terms ranging between two and seven years. Loan amounts range from $5,000 to $100,000 with an APR of 6.99% to 21.78% depending on the applicant’s credit score. SoFi has zero fees, including no early repayment penalties, origination, or hidden fees.

To be eligible for a SoFi loan, applicants should have a credit score good enough to satisfy SoFi, be a U.S. citizen, permanent resident, or visa holder, be 18 years or older, and reside in one of the 49 states eligible for personal loans. They should also be employed, have sufficient income from other sources, or have an offer of employment to start within the next 90 days.

SoFi has an average score of three stars out of five from customers who wrote a review on ConsumerAffairs.

A few of SoFi’s added perks are a mobile app, career coaching, financial planning, and estate planning.

Read the full SoFi Personal Loans Review.

Best for Bad Credit : Avant

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Most of Avant's customers have a credit score between 600 and 700. Some customers may have scores even lower than 600, making Avant our recommendation for an installment loan if you have bad credit.

Pros

Accepts credit scores of 600 and possibly lower
Low minimum loan amount
Offers secured loan options

Cons

Low maximum loan amount
Higher fees than most lenders
There is no co-sign or joint loan option

Most installment loan providers require a credit score of at least 650, but our choice for candidates with bad credit, Avant, is more lenient. Most customers have a score between 600 and 700. This implies that a few people with scores below 600 are also approved.

Based in Chicago, Illinois, Avant was established in 2012 to offer personal loans and their personal credit card to applicants who either need a loan or want to build their credit.

Applicants are eligible to borrow $2,000 to $35,000 at rates that range from a 9.95% to 35.99% APR, and loan terms of two to five years. Avant charges an origination fee of up to 4.75%, which is not the lowest but is not as high as some other lenders’ origination fees of 10%. Avant charges $25 for late payments, as well as a Dishonored Payment Fee of $15 charged if your monthly payment bounces.

Avant will work with applicants who can offer a vehicle or other property as collateral to get a lower APR or a higher loan amount.

Avant has over 19,000 reviews on Trustpilot, with an average score of 4.7 out of five stars for all their services combined.

Read the full Avant Personal Loans Review.

Best for Debt Consolidation : Discover Personal Loans

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For those who want to minimize loan costs and set up a flexible repayment term, Discover Personal Loans offers the best option for consolidating multiple loans.

Pros

Option to customize the loan amount and length
Flexible repayment terms
No fees as long as you pay everything on time
Return loan funds within 30 days and pay no interest
Free Credit Scorecard with your FICO Credit Score

Cons

No rate discount for autopay
No co-signed, joint, or secured loan options
May charge late fees

Discover Personal Loans’ debt consolidation program stands out from its peers, thanks to its flexible repayment options, customized loan terms, and because the company will pay the borrower’s creditors directly.

Discover was founded in 1985, starting with only Discover cards and then expanding to a whole array of financial products. Today, its name is well-known in the financial world and is relied on by millions of customers.

Your APR will range between 5.99% and 24.99%, with no origination fees and flexible repayment terms of 36, 48, 60, 72, or 84 months. Customers can also decide to repay the loan funds within 30 days without having to pay any penalty or interest. Discover has no geographical restrictions for its installment loans in the U.S. and lends between $2,500 and $35,000.

Discover Personal Loans also require you to:

Be a U.S. citizen or permanent resident
Be at least 18 years old
Have a minimum household income of at least $25,000

According to their website, Discover’s Personal Loans have a rating of 4.9-stars based on about 19,000 reviews.

You can apply, check your application, and respond to an invitation entirely online. In addition to this, Discover has a 30-day money-back guarantee through which applicants can return their loans without having to pay any interest or fees.

Read the full Discover Personal Loans Review.

The Bottom Line

When shopping for an installment loan, finding the lowest APR is important, but there are other factors to watch for as well. For example, different lenders have different loan minimums and maximums. Make sure your loan request fits into the loan limits.

Look at term length as well. Do you want a longer term that affords you lower payments? Then look for loan programs in the seven- to 12-year range, the longest terms you'll find. Finally, check for signup or origination fees, early payment fees, late charges, and bounce fees. Not all lenders have these fees. In fact, a few on our list do not have any, like Marcus by Goldman Sachs and SoFi.

Compare Providers

Company	Why We Picked It	Best Features
Marcus by Goldman Sachs	Best Overall	No fees; Option to defer a payment after 12 on-time payments
LightStream	Best for Long Repayment Terms	20-year installment loans for home improvement; No fees; Possible to fund in one day
BestEgg	Best for Excellent Credit	Very high customer reviews
SoFi	Best for Early Repayment Options	Loans up to $100,000; Zero fees or penalties
Avant	Best for Bad Credit	Works with lower credit scores with most being in the 600 to 700 range and some even lower being accepted; Has secured loan options
Discover Personal Loans	Best for Debt Consolidation	Free Credit Scorecard with your FICO Credit Score; Return loan funds within 30 days and pay no interest; Flexible term options

Frequently Asked Questions

Does an Installment Loan Hurt Your Credit?

Installment loans do not hurt your credit, as long as you make your monthly payments on time. According to Experian, each loan on your credit report gives you a more robust credit history. Making payments on time will help your credit score because it shows that you can manage debt responsibly.

Before you get too excited, however, understand that they will not increase your score instantly, nor by a lot. When a lender pulls your credit report, you will probably see an initial dip in your score by a few points, and the increasing debt-to-income ratio may also drop your score additional points initially. So boosting your score with on-time installment loan payments can take several months.

Which Is Better: A Payday Loan or an Installment Loan?

An installment loan will almost always have better terms for the borrower than a payday loan. Whereas installment loans are paid back over time in smaller monthly payments, payday loans are usually paid back in a single lump-sum payment.

Installment loans also lend bigger sums of money than payday loans and have lower fees and interest rates. Payday loans should be reserved for last-resort scenarios when you are faced with a short-term cash crunch in between paychecks.

What Happens If You Pay Off an Installment Loan Early?

According to InCharge Debt Solutions, a 501(c)(3) non-profit credit counseling organization and member of the National Foundation for Credit Counseling, the best reason to pay off an installment loan early is to save on interest payments. The longer you carry out your term payments, the more interest you will pay in total over time.

But paying off an installment loan early may not improve your credit score. Credit bureaus prefer to see you have several open, aged accounts, that you pay on time. Paying your loan off early closes that loan on your report. A caveat to this is if your credit score is hurting because you have a high debt-to-income ratio, you may benefit from paying off some of your debts as soon as possible.

Make sure your installment loan does not come with prepayment penalties. This type of fee is designed so that the lender can capture the future interest they will lose if you pay your loan off early.

How We Chose the Best Installment Loans

We investigated 12 installment loan providers and evaluated each based on the lender’s company history and customer reviews to paint a picture for you of its trustworthiness. We dug into the details of their loan terms, including rates, term lengths, and conditions, to better understand their pros and cons. Then, to more fully understand their costs, we found out if they carried origination or signup fees or prepayment penalties.

Finally, we outlined how you can qualify for their installment loans, what limitations they may have, and what added perks they offer to complement their loan service.

Article Sources

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