With installment loans, you have the option to repay your debt over time for any objective, including a new car or home improvement work. A personal installment loan allows you to borrow a specified amount and repay it over time.
Best Installment Loans 2023
The set interest rate on the majority of installment loans implies you’ll make the same monthly payment until the loan is repaid. However, installment loans come in many different forms, including personal, vehicle, debt consolidation, and even “buy now, pay later” loans.
How Installment Loans Work
Installment loans provide you with a large sum of money that you repay in predetermined monthly payments, or installments, typically with a fixed interest rate. However, the terms of most installment loans range from a few months to a few years.
Pros
- Set monthly payments.
- Ability to refinance.
- Boosts your credit score.
Cons
- Higher APRs, in some cases.
- Can hurt your credit score.
- May require collateral.
Best Installment Loans for July 2023
Wells Fargo
This huge national lender may be the greatest option for you if you require a continuous significant amount of funds for any reason. For customers with different credit scores, Wells Fargo offers a variety of interest rates, flexible repayment options, and loan amounts. However, you can receive a 0.25% interest reduction if you have a Wells Fargo checking account.
However, if you don’t have enough money in your bank account to cover a payment, you should be aware that Wells Fargo is infamous for charging hefty late fees as well as non-sufficient fund fines.
SoFi
You can consolidate various high-interest debt sources, including credit cards, into a more manageable fixed-rate loan with Social Financing’s (SoFi) attractive rates on debt consolidation loans. It does not impose processing, prepayment, or late fees and offers low-interest rates.
SoFi also provides free financial advice and rebates for autopay customers. One standout feature is its unemployment protection program, which lets you cut your payments for up to 12 months if you lose your work. To be approved by SoFi, you must have good credit; the minimum required credit score is 680. Additionally, SoFi does not provide loans in New York or Hawaii.
Consumers Credit Union
Although this credit union has its headquarters in Illinois, anyone can join. For new car loans, Consumers Credit Union provides a wide selection of loan amounts, periods, and rates. You must submit a valid ID, two most recent pay stubs, two most recent tax returns, two utility bills, five references, and a $5 joining fee in order to join.
PenFed Credit Union
If you want to buy a new car, Pentagon Federal Credit Union is an excellent choice. It also offers decent rates on used car loans. This credit union, which offers the lowest rates to its members, provides low rates for both new and used cars bought using the PenFed Car Buying Service. Anyone who opens a PenFed saving account with a minimum $5 deposit is eligible for membership.
Affirm
The greatest buy now, pay later option is offered by Affirm. Use buy-now, pay-later applications to make immediate purchases of products or services and spread out the repayment of those purchases over time. Among BNPL apps, Affirm stands out since it provides a range of payment alternatives, from the typical six- to eight-week installment plans to 60-month installments. In addition, Affirm provides quick prequalification, a high $17,500 purchasing limit, and both digital and physical cards that let you make purchases anywhere that accepts Visa.
The Split Pay option in Affirm’s payment plans allows you to split the total cost into four interest-free payments that are payable every two weeks, with the first installment being due at the time of checkout. If necessary, you can extend the payback period to eight weeks without making a down payment.
This BNPL service is distinctive in that it provides adjustable biweekly and monthly payment plans with terms ranging from six weeks to 60 months.
How to Apply and Qualify for an Installment Loan
Below are some tips to help in your qualification and application process;
- Examine your finances. Calculate the amount you must borrow and how much you can afford to pay each month to the loan. To find out how alternative loan APRs and terms can increase or decrease your monthly payment, utilize an APR calculator.
- Check your credit score. Check your credit report for inaccuracies, which might harm your credit score, before applying for an installment loan.
- Get prequalified. Getting prequalified by a lender usually enables you to check lender rates.
- Compare lender offers. Next, compare loan rates and terms offered by several lenders to see if one offers the best rate, shortest loan period, and lowest costs.
- Apply for the loan. It’s time to submit an application for your installment loan after you’ve chosen a lender. During this step, you might be asked to submit financial records like pay stubs, bank statements, or tax returns. The lender will then do a hard inquiry, which could temporarily reduce your credit score, on your credit profile.
Frequently Asked Questions (FAQs)
Can I Get an Installment Loan with Bad Credit?
Even while having a good credit score can increase your chances of being approved for an installment loan, you can still be authorized for a loan if your credit score is poor. Expect to pay a higher interest rate and maybe additional costs, such as an origination fee, in order to process your loan.
Are Installment Loans Secured or Unsecured?
In order to get approved for the majority of personal installment loans. For debt consolidation loans and student loans, you are not required to put up any type of security. Collateral is necessary for the approval of a secured loan. Mortgages and auto loans are two typical instances of secured loans in which the property you’re purchasing serves as security.