Best Installment Loans for 2017

Using unsecured loans in a safe and responsible way.

Here’s a look at some high quality lenders that cater to a range of borrowers, offering installment loans without the exorbitant APRs and unscrupulous tactics used by some short-term, small-dollar lenders. Lending Club is our first choice for online lenders and OneMain for traditional “brick-and-mortar” lenders if you prefer looking your lender in the eye! Use our loan search tool below, or read on, for additional lenders that I recommend.

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Use our loan comparison tool to view multiple loan options from $500 to $35,000+ with no obligation.
Simply enter you zip code, estimated credit rating, monthly income, and the loan amount you need to instantly view loan companies available to accept your application online right now.

Later in this article, I outline why these lenders stand out from the rest when it comes to installment loans. I also examine what installment loans are in more detail, why they aren’t simply for borrowers with bad credit, how to avoid shady installment loans and lenders, and how to shop for the best installment loans.

The Simple Dollar’s Top Picks

Best Online Installment Loans

Best Installment Loans with Physical Office Locations

Best Online Installment Loans: Lending Club

Another peer-to-peer loan leader, Lending Club is very similar to Prosper. Loans via Lending Club top out at $40,000 and APRs range from 5.99% – 35.89%* APR. Best APR is available to borrowers with excellent credit.

In general, Lending Club may be a bit stingier about loan approval than Prosper, and it’s not available in Iowa or West Virginia. Fees are competitive between the two companies, but Lending Club charges you a fee if you make a monthly payment by check.

Runner-up: PersonalLoans.com

PersonalLoans.com offers several types of loans from traditional bank loans, peer-to-peer loans, and installment loans. Available in all 50 states, PersonalLoans.com distributes loans up to $35,000 with APRs ranging from from 5% to 36%.

While it’s an authoritative and informative resource, PersonalLoans.com is only a referral site and not a direct lender. This makes it hard to know in advance critical information that might be easier to understand with a direct lender like which fees will be attached to your loan or which APR rates will be offered. When shopping around, we suggest using PersonalLoans.com to save time and effort by soliciting multiple offers at once from a variety of lenders.

Runner-up: Avant

If your credit isn’t quite up to snuff for Prosper or Lending Club, you may still be able to swing a loan through Avant as long as your credit score is at least 580. Your loan will be capped at a lower $35,000* and APRs are a bit higher (starting at 9.95%), but you may receive your money faster. The company provides access to loans in 47 states and the District of Columbia. Note that this is a relatively new startup, which may not appeal to some more nervous borrowers.

* The actual loan amount, term, and APR amount of loan that a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state.

Runner-up: Prosper

You’ll need solid credit to get a loan with peer-to-peer lender Prosper, but qualifying can net you a competitive APR that starts around 5.99%. You’ll also be able to borrow up to $35,000, a generous amount for personal installment loans. Prosper shines with a transparent, easy-to-use website that doesn’t bury any important information in fine print, and it makes loans in all but three states.

If you need money right away, Prosper won’t be the best option, however. It may take a week or two for investors to fully fund your loan — this is a risk with all peer-to-peer lending. You’ll also pay an origination fee of up to 5% of the loan.

Best Installment Loans With Offices: OneMain

Whether your credit score limits your options or you simply want to shake someone’s hand before you plead your case, OneMain might be a good fit. This well-established lender makes mostly unsecured loans, but also make secured loans that can get borrowers a lower APR than they may otherwise get. More than 1,800 branches across the country make OneMain a convenient brick-and-mortar option for many borrowers, but you can also apply online.

Pros

  • Works with borrowers who have less then perfect credit
  • Secured and unsecured loans both available
  • Has more than 1,800 branches
  • Established, reputable lender has A+ rating with BBB

Cons

  • Not available in 6 states

Runner-up: Wells Fargo

Wells Fargo is a solid option for borrowers with good or excellent credit who want a combination of personal service and competitive loan terms. With 6,200 branches, Wells Fargo is one of the largest banks in the nation, and its website offers polished account management tools. APRs range from 6.25% to 19.75% for loans from $3,000 up to a jumbo $100,000.

You’ll need to head to a branch and apply in person unless you’re already a Wells Fargo customer, however. Most personal installment loans are unsecured, but you may be able to get a secured loan if you have a Wells Fargo CD or savings account that you can use as collateral.

What Is an Installment Loan?

An installment loan is simply a loan that a borrower receives in a single lump sum, then pays back for a certain period of time at certain intervals (typically monthly) and at a fixed interest rate. Your payments, or installments, won’t fluctuate and will be made up of both the loan principal and interest. Installment loans are also commonly called personal loans. Most general installment loans (in contrast to a car loan or a mortgage, for example) can be used for any purpose.

Installment loans may be secured or unsecured. A secured installment loan requires you to use collateral such as your house or car to guarantee that the lender will be paid back. If you fall behind on your payments, that means your lender can seize the asset you’ve designated as collateral.

For this reason, secured loans are much less risky for lenders. They may allow borrowers who don’t have great credit to obtain a lower interest rate than they would otherwise get without using collateral. Of course, this also means they’re riskier for you, since you may lose a valuable asset if you can’t make your payments.

In contrast, an unsecured personal loan requires no collateral. If you default on an unsecured loan, you won’t lose an asset — but you will still do serious damage to your credit. Unsecured loans are riskier for lenders since they won’t have much recourse to obtain payment if you fall behind. That means you may pay a higher interest rate, especially if your credit isn’t up to snuff — this helps the lender manage the risk of making you the loan.

Aren’t Installment Loans for People With Bad Credit?

No — as I wrote above, installment loans are for everyone, and you may already have one. It’s a common misconception that installment loans are for borrowers with bad credit because subprime lenders have aggressively marketed them as a lower-risk alternative to often-predatory payday lending.

Unfortunately, vulnerable bad-credit borrowers have found out the hard way that APRs on installment loans — just like payday loans — can still reach into the triple digits. Other unscrupulous tactics include strong-arming borrowers into purchasing credit insurance or convincing them to renew the loan every few months, which ultimately means borrowers pay more in interest and risk becoming dependent on the loan.

How Do I Avoid Predatory Lenders When I’m Looking for an Installment Loan?

Searching for “installment loan” online will return mostly short-term, low-dollar lenders who pitch installment loans as the safer, more responsible cousin of payday loans. Unfortunately, they are much the same in practice. Here are some tips that will help you avoid these riskier kinds of installment loans:

  • Search for personal loans, not installment loans. Personal loans are installment loans, but the terminology hasn’t been hijacked by predatory lenders. You may find that simply reframing your search leads to more reputable results. To learn more about unsecured personal loans, check out my post on the Best Unsecured Loans.
  • Avoid lenders who push loan renewals. Constant loan renewals are a cash cow for unscrupulous lenders, who know that you’re paying mostly interest or other fees at first. The more frequently you renew your loan, the more money goes in their pocket — and the more dependent on the loan you become. Remember, reputable lenders do not want to drag you deeper into debt. They want you to borrow only what you can comfortably afford to repay.
  • Just say no to insurance add-ons. If your lender pushes insurance such as credit life insurance or credit disability insurance, firmly decline. These policies don’t protect you — they just ensure the lender will get their money if you die or become disabled. They’re also expensive, and can boost your APR well beyond what state regulations may allow. However, lenders don’t have to include the cost of these policies in APR calculations, making your loan look far cheaper than it actually is.
  • Steer clear of advance fees and guarantees. A lender may promise that you’ll be approved for a loan without checking your credit or other financial information — that should be a huge red flag. They may also require an upfront fee — another red flag. Reputable lenders will not charge you to apply for a loan, and they certainly won’t guarantee that you’ll qualify without looking at your credit score, income, and other financial obligations.
  • Don’t work with high-pressure lenders. If you feel pressured in any way to borrow more money than you need, avoid shopping around, or sign loan documents before you feel ready, walk away. Some predatory lenders may even threaten to sue if you fall behind on payments unless you renew a loan.
  • Do your homework and approach a lender on your own, not the other way around. Unscrupulous companies are more likely to suss out customers with calls, emails, postcards, and other advertisements. Legitimate lenders usually don’t need to go to these lengths.

Four Tips on Shopping for an Installment Loan

Now that you know how to avoid predatory lenders, here are some additional tips on how to get the best deal on an installment loan from reputable sources.

#1: Shop Around

Installment loans are available numerous places, including banks, credit unions, online lenders, and short-term, no-credit-check lenders who may also offer payday loans or auto title loans. I’ve already discussed why the latter companies are bad news, but that still leaves you with plenty of places to shop.

It’s wise to see what installment loans your existing bank may offer before you consider other options. They may give you a low interest rate or favorable repayment terms in order to keep your business. Assuming you’ve built a history of responsible money management, they may also ease lending criteria if you need a bit of help. Credit unions are also worth a look if you’re unsure you’ll qualify at most big banks — they are able to examine requests on more of a case-by-case basis.

Applying for a loan with online lenders is undeniably convenient and typically quicker than your other options, too. However, you may find that APRs are a bit higher online — this is the price you pay for convenience. A site like PersonalLoans.com can help you compare options and match you with lenders in its network, reducing the chances that you’ll be turned down or you can use our loan search tool below to find even more options.

Compare Loan Companies and Apply Online
Use our loan comparison tool to view multiple loan options from $500 to $35,000+ with no obligation.
Simply enter you zip code, estimated credit rating, monthly income, and the loan amount you need to instantly view loan companies available to accept your application online right now.

#2: Make Sure a Credit Card Doesn’t Make More Sense

In some cases, you might be better off charging a big expense on a credit card instead of using an installment loan. This is more likely to be the case if you have solid credit and a low APR introductory offer on your card — maybe even 0% for a certain number of months. Of course, you need to be able to pay off the card before the interest rate resets.

If you need more time to pay off your expense or more money than your credit limit will allow you to borrow, an installment loan is likely your better bet. Though you may have to pay an origination fee, it will be easier to budget for a fixed monthly loan payment. Responsible use of installment loans can also boost your credit score, whereas charging and keeping large amounts on your credit cards can do the opposite.

#3: Compare Fees

As I mentioned above, it’s common for lenders to charge an origination fee for an installment loan. This could be anywhere from 1% to about 6% of the total loan amount. The stated APR of your loan should take this fee into account, but it never hurts to double-check.

You’ll also want to know whether your lender charges late fees, unsuccessful payment fees, or fees for paying by check. Avoid any lender that charges you a prepayment fee for paying off your loan early. Some lenders charge these fees because they make more money in interest if you need your entire term to pay back your loan. If your lender does charge a prepayment fee, ask for it to be waived — and get it in writing.

#4: Borrow for the Shortest Term Possible

What kind of choice you’ll have on repayment terms vary by lender — some may require a certain term or only let you choose from two terms, while others will let you pick any term within a certain range (for example, one to five years). Spreading your loan over a longer term means your monthly payments will be lower, but it also means you’ll pay more for the loan — sometimes significantly more — because you’ll pay more in interest.

According to this Bankrate calculator, if I paid back an $8,000 installment loan at a 12% interest rate in two years, I would pay $9,038 over the life of the loan. If I needed three years to pay it back, I would pay $9,566, and if I needed four years, I would pay $10,112. However, the shorter term will mean my monthly payments will be higher ($377 a month for two years instead of $266 for three years or $211 for four). Of course, you need to be able to afford the higher payments, but if you can, you’ll keep your overall costs down.

Best Installment Loan Companies: Summed Up

7 Top Installment Loan Companies

Type

1

Lending Club

Online Company

2

PersonalLoans.com

Online Company

3

Avant

Online Company

4

Prosper

Online Company

5

OneMain

Online Company with Physical Office Locations

6

Wells Fargo

Online Company with Physical Office Locations

How I Picked the Best Installment Loans

My search for the best installment loans required companies to offer competitive APRs (note that I gave more latitude to lenders targeting borrowers without ideal credit). Beyond that, I searched for lenders who are available in a majority of the country that offered somewhat flexible loan terms and larger-dollar loans of at least $10,000.

Transparency was also a major consideration. I looked for companies that clearly disclosed APRs and fees, which had to be reasonable compared to those charged by competitors. I also liked to see clear FAQ sections that addressed prospective borrowers’ common concerns. Bonus points went to lenders that offered educational resources such as loan calculators.

While I considered each lender’s longevity and reputation, they were among the least important factors I weighed. Online reviews are of limited help when evaluating loan companies, as many negative reviews are from customers who are unhappy they were turned down. Accreditation and good standing with the BBB was a bonus, but not a necessity.

Finding the Best Installment Loans

When you’re searching for an installment loan, it’s important to find an established lender that will do a thorough credit check after you apply. No-credit-check finance companies may be tempting, especially if your credit isn’t great, but the installment loans you’ll receive may have very high APRs and other pitfalls that could suck you into a cycle of debt. A reputable lender won’t want you to borrow more or nag you to renew your loan. If you don’t know where to start, consider whether any of the companies I profiled above are a good fit or use our loan search tool below to compare multiple lenders easily online.

Compare Loan Companies and Apply Online
Use our loan comparison tool to view multiple loan options from $500 to $35,000+ with no obligation.
Simply enter you zip code, estimated credit rating, monthly income, and the loan amount you need to instantly view loan companies available to accept your application online right now.
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