How does an installment loan affect your credit?

Your credit score may improve or drop depending on how you manage installment loans. These are some of the ways installment loans can impact your credit. It boosts your score if you use it to pay off revolving credit card debt. Your credit utilization ratio measures how much revolving credit you have compared to your total available credit, accounting for 30 percent of your overall score. Paying credit card debt off with an installment loan could push this ratio down and boost your score significantly. It can add to your mix of total credit. You might get a slight bump in your score if you don’t have any other installment loans since 10 percent of your score is made up of your credit mix, which looks at how many different types of credit you have. Diversifying your credit with a combination of installment loans and credit cards may help improve this part of your credit score. But if you have multiple installment loans, adding another shouldn't make a difference. It contributes to building your credit history. Having a loan with regular payments for five to seven years helps with your length of credit history, which is 15 percent of your credit score. Once your loan is paid off, it's considered a closed account. Closed accounts in good standing could benefit your credit, as they stay on your credit file for 10 years. It can also negatively affect your credit if you take on too much debt or miss payments. The initial hard inquiry will also temporarily drop your score by a few points.

Are there no-credit-check installment loans?

Some lenders offer long-term installment loans with no hard pull on your credit report. But note that obtaining financing from a lender that doesn't check your credit isn't typically a good idea. No-credit-check lenders may bill themselves as alternatives to other last-resort sources of cash, such as payday loans and car title loans, but consumers should proceed with great caution. These loans typically come with very high rates that may become unaffordable.

How are installment loans different from payday loans?

Payday loans are secured by your paycheck. When you get a payday loan, you give the lender a postdated check to deposit on your next payday, or the lender may require authorization to directly withdraw the money from your bank account after you get paid. Payday loans can have three-digit APRs, with exorbitant fees that can send borrowers into an endless cycle of mounting debt. Interest rates on personal loans (a type of installment loan) on the other hand, are usually capped at 36 percent. Many of them are also unsecured, so you don’t have to worry about putting up any collateral. Installment loans and payday loans differ in terms of repayment. While payday loans must be repaid in a matter of days, personal loans feature flexible repayment terms of up to seven years. If you don’t qualify for a personal loan, consider a payday alternative loan (PAL) among other emergency loan options before resorting to a payday loan.

Is now a good time to get an installment loan?

It largely depends on your personal finances and immediate needs. Personal loan interest rates have remained steady, but other types of installment loans — like mortgages and auto loans — have seen large fluctuations in average APR over the last year. If you need a personal loan and have good-to-excellent credit, you may be able to take advantage of relatively competitive rates ahead of possible changes to the Fed funds rate. If you have fair or worse credit, it’s improving your credit score before you apply, if possible.

Best installment loans in February 2026

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Updated Feb. 26, 2026

What to know first: An installment loan lets you borrow a fixed sum of money and pay it back over a set period. Bankrate’s experts analyzed dozens of lenders to find the best options. We chose lenders that serve multiple credit profiles with competitive interest rates and flexible terms so you can find a loan that fits your finances. Read more about how we made our picks.

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LightStream Personal Loan: Best for excellent credit

APR: 6.49% - 24.89% with AutoPay
Minimum credit score: 660
Estimated monthly payment: $335
Loan amount: $5K - $100K
Bankrate score: 4.5 out of 5 stars
Best for excellent credit

Upstart Personal Loan: Best for bad credit

APR: 6.20% - 35.99%
Minimum credit score: 300
Estimated monthly payment: $352
Loan amount: $1K - $75K
Bankrate score: 4.7 out of 5 stars
Best for bad credit

LendingClub Personal Loan: Best for co-borrowers

APR: 6.53% - 35.99%
Minimum credit score: 600
Estimated monthly payment: $353
Loan amount: $1K - $60K
Bankrate score: 4.7 out of 5 stars
Best for co-borrowers

Happy Money Personal Loan: Best for debt consolidation

APR: 7.95% - 35.99%
Minimum credit score: 640
Estimated monthly payment: $358
Loan amount: $5K - $40K
Bankrate score: 4.5 out of 5 stars
Best for debt consolidation

Citi® Personal Loan Personal Loan: Best for short repayment terms

APR: 9.99% - 17.49%
Minimum credit score: 680
Estimated monthly payment: $334
Loan amount: $2K - $30K
Bankrate score: 4.6 out of 5 stars
Best for short repayment terms

SoFi Personal Loan: Best online lender

APR: 8.74% - 35.49%with all discounts
Minimum credit score: 300
Estimated monthly payment: $360
Loan amount: $5K - $100K
Bankrate score: 4.7 out of 5 stars
Best online lender

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Use Bankrate’s personal loan calculator to determine expected costs ahead of applying for an installment loan. You can estimate your monthly payment based off of average interest rates and your desired loan term.

What are installment loans?

An installment loan allows you to borrow a fixed amount of money and pay it back over a set period, usually two to seven years. The main benefits of an installment loan are its predictable monthly payment and a set payoff date.

One major advantage of installment loans over revolving debt, like credit cards, is the positive effect it can have on your credit utilization ratio. Your credit utilization ratio drops when you pay off revolving credit like credit cards, which can boost your credit scores significantly. Installment loans can be an excellent tool to improve your credit score if you use them to consolidate high-interest debt.

Installment loans can either be secured or unsecured. Most installment loans are unsecured personal loans that don't require you to pledge an asset like a home or car. They also feature lower average interest rates than credit cards, which could lead to significant interest savings.

How to compare installment loans

When comparing installment loans side-by-side, consider the terms offered by each lender and previous borrowers' experiences.

Consider available terms. Check the minimum and maximum annual percentage rate (APR) offered by each lender along with its term lengths and potential fees.
Understand eligibility criteria. Lenders that offer installment loans tend to offer the best rates to those with good to excellent credit, high income and low debt. However, there are bad credit lenders that you can also explore.
Check funding speed. Many lenders are able to approve or deny your application within a few minutes of applying. If approved, you could be funded within one to two business days.
Read lender reviews. Before you apply, see what other people have to say about their loan experience and the lender's customer service.
Choose the right type of lender. Installment loans are offered by banks, credit unions and online lenders. You can also use options like Bankrate to quickly compare potential lenders and terms before you apply.

Types of installment loans

A personal loan is typically unsecured, paid out as a lump sum and is repaid over two to seven years. This makes them a useful choice for funding large one-time expenses like debt consolidation, home improvement projects, weddings and emergency expenses.
A mortgage is a secured loan used to buy a house or property. This acts as collateral to secure the loan, which is paid monthly over 15 to 30 years. While there are a few types of mortgages, a standard 30-year mortgage is an installment loan with a set interest rate.
An auto loan is used to buy a vehicle or refinance a previous loan. Like mortgages, an auto loan is secured by the vehicle you purchase, which means auto loan rates can be lower than unsecured loans. Auto loans are paid monthly, typically over two to seven years, and can be used to cover a new or used purchase, buy from a private seller or buy out your lease.
A student loan is a type of unsecured loan that can be used to pay for education expenses, such as tuition, fees and room and board. Federal student loans should be every student's first choice, but there are also private student loans available if you need to supplement federal funding. Student loan rates can be fixed or variable, repayment terms range from five to 20 years, and many types of student loans have grace periods and deferment while you are in school or immediately after you graduate.
A BNPL loan will have a few small payments, usually two to four installments paid over a few weeks to a few months. This type of loan has recently gained popularity because they may be interest free or offer the flexibility to change payment due dates.
If you own a home, you may be able to tap a portion of your equity with a home equity loan. With one, you to use the funds to pay for a variety of large expenses like college tuition or major home renovations. Your interest may even be tax-deductible if you use it solely for home improvements, like remodeling a room or building an addition. Because your home is used to secure it the rates for a home equity loan are typically lower than unsecured personal loans.
Although not ideal, a 401(k) loan is another choice to consider. However, not all plan administrators offer this option. You can also withdraw retirement money from an IRA or a 401(k), but this is not advised, as you will be cutting into your retirement funds and may face tax penalties.

Ask the Experts

How many installment loans should you have?

Mark Kantrowitz

Bankrate Expert Contributor, Student Loans

Installment loans are best for major purchases, such as buying a home or car. Examples include mortgages and auto loans. Installment loans let you spread out the cost over several years, so you don’t have to pay for a big expense all at once. Most people do not have enough money saved to buy big ticket items with cash. You should devote no more than a third of your income to repaying debt, so you have enough money to cover your living expenses and pay your taxes. Installment loans can also help you build good credit if you make the monthly payments on time every time.

Andrew Pentis

Writer and Consumer Lending Analyst

Ideally, you should only have installment loans that are useful and necessary, and realistically fit within your budget. While it’s helpful to have various credit accounts on your credit report — your “credit mix” impacts your credit score, after all — this isn’t the right way to think about when or how to take on debt. Instead, try the useful-and-necessary test as a starting point. For instance, if you’re considering a federal student loan to pay for (your child’s) college or a mortgage to buy your home, those loans are useful and necessary for millions of Americans. If you are thinking of borrowing a personal loan to pay for an extravagant vacation, on the other hand, the cash could definitely be useful but perhaps unnecessary. Paying for that vacation is also possible through more time-intensive means, such as budgeting and saving up. If a particular installment loan passes the initial test, then consider whether you can reasonably afford to repay it on time, considering that installment loans have fixed payments, not a “minimum amount due” like on a credit card. By confirming affordability before borrowing, you can save yourself some stress and minimize the risk to your financial future.

How to get an installment loan with Bankrate

You can use Bankrate's list of top lenders to start your search. Follow these steps to make the most out of your application process:

Decide how much money you need. The more you borrow, the higher your monthly payment will be. Using a personal loan calculator gives you an idea of the monthly payments. Experiment with longer terms for lower payments, but keep an eye on how much interest you’ll save with a shorter term.
Know your credit score. A credit score above 670 will get you competitive rates, while a fair credit score between 580 and 669 could result in double-digit interest rate offers. Also check your credit report with all three credit bureaus — Equifax, Transunion and Experian — to see if there are any errors.
Choose what type of personal loan to apply for. There are several types of personal loans, ranging from unsecured to secured and cosigned to co-borrowed.
Shop for the best rate and terms. Compare at least three lenders before making a final decision. A comparison site like Bankrate is a useful way to check several lenders without a hard credit pull that could damage your credit.
Finalize your application. Survey lenders with the best personal loan rates and terms for your situation, then complete the application process and provide any necessary paperwork.

Bankrate tip: Getting an installment loan with bad credit

While getting a bad credit installment loan is possible, you may need to shop around a bit more to find the best terms or settle for a smaller amount to prove you can handle the payment. Check out secured personal loans backed by a car or home. Lenders consider them less risky, which could land you a lower rate than unsecured bad credit loans. Adding a cosigner could also help you qualify for a better rate or larger loan amount.

Frequently asked questions

Your credit score may improve or drop depending on how you manage installment loans. These are some of the ways installment loans can impact your credit.
- It boosts your score if you use it to pay off revolving credit card debt. Your credit utilization ratio measures how much revolving credit you have compared to your total available credit, accounting for 30 percent of your overall score. Paying credit card debt off with an installment loan could push this ratio down and boost your score significantly.
- It can add to your mix of total credit. You might get a slight bump in your score if you don’t have any other installment loans since 10 percent of your score is made up of your credit mix, which looks at how many different types of credit you have. Diversifying your credit with a combination of installment loans and credit cards may help improve this part of your credit score. But if you have multiple installment loans, adding another shouldn't make a difference.
- It contributes to building your credit history. Having a loan with regular payments for five to seven years helps with your length of credit history, which is 15 percent of your credit score. Once your loan is paid off, it's considered a closed account. Closed accounts in good standing could benefit your credit, as they stay on your credit file for 10 years.
It can also negatively affect your credit if you take on too much debt or miss payments. The initial hard inquiry will also temporarily drop your score by a few points.
Some lenders offer long-term installment loans with no hard pull on your credit report. But note that obtaining financing from a lender that doesn't check your credit isn't typically a good idea.

No-credit-check lenders may bill themselves as alternatives to other last-resort sources of cash, such as payday loans and car title loans, but consumers should proceed with great caution. These loans typically come with very high rates that may become unaffordable.
Payday loans are secured by your paycheck. When you get a payday loan, you give the lender a postdated check to deposit on your next payday, or the lender may require authorization to directly withdraw the money from your bank account after you get paid. Payday loans can have three-digit APRs, with exorbitant fees that can send borrowers into an endless cycle of mounting debt.

Interest rates on personal loans (a type of installment loan) on the other hand, are usually capped at 36 percent. Many of them are also unsecured, so you don’t have to worry about putting up any collateral. Installment loans and payday loans differ in terms of repayment. While payday loans must be repaid in a matter of days, personal loans feature flexible repayment terms of up to seven years.

If you don’t qualify for a personal loan, consider a payday alternative loan (PAL) among other emergency loan options before resorting to a payday loan.
It largely depends on your personal finances and immediate needs. Personal loan interest rates have remained steady, but other types of installment loans — like mortgages and auto loans — have seen large fluctuations in average APR over the last year.

If you need a personal loan and have good-to-excellent credit, you may be able to take advantage of relatively competitive rates ahead of possible changes to the Fed funds rate. If you have fair or worse credit, it’s improving your credit score before you apply, if possible.

Learn more about installment loans

Top 3 Alternatives To Installment Loans | Bankrate

These alternatives may help you find a better financing option for your budget and lifestyle.

Payday Loans vs. Installment Loans | Bankrate

If you are considering a short-term loan, compare the differences between payday loans and installment loans — and seek alternatives.

Do Installment Loans Build Credit? Yes — Here’s How | Bankrate

Improve your credit score by building a history of on-time payments, increasing the average age of your credit and potentially lowering your debt-to-income ratio.

How To Compare Installment Loan Lenders: 5 Steps | Bankrate

Learn the differences between top lenders so you can make an informed decision before you borrow.

How we made our picks for the best installment loans

Bankrate's trusted personal loans industry expertise

Read our full methodology

years in business

lenders reviewed

loan features weighed

900

data points collected

To select the best personal loans, Bankrate’s team of experts evaluated over 40 lenders. Each lender was ranked using a meticulous 20-point system, focusing on four main categories:

The interest rates, penalties and fees are measured in this section of the score. Lower rates and fees and fewer potential penalties result in a higher score. We also give bonus points to lenders offering rate discounts, grace periods and that allow borrowers to change their due date.
Minimum loan amounts, number of repayment terms, eligibility requirements, ability to apply using a co-borrower or co-signer and loan turnaround time are considered in this category.
This category covers customer service hours, if online applications are available, online account access and mobile apps.
For this factor, we consider how well information is presented to the borrower on the lender’s website. This includes listing credit requirements, rates and fees, in addition to offering prequalification.

Written by

Denny Ceizyk Denny Ceizyk

Former Senior Writer, Loans

Best installment loans in February 2026

Compare and prequalify for installment loans

Best installment loans

How Bankrate works

How Bankrate works

Compare rates

Tell us the basics

Get matched and receive funding

Calculate your installment loan payment

What are installment loans?

How to compare installment loans

Types of installment loans

Personal loans

Mortgages

Auto loans

Student loans

Buy now, pay later (BNPL) loans

Home equity loans

401(k) loans

How many installment loans should you have?

How to get an installment loan with Bankrate

Frequently asked questions

How does an installment loan affect your credit?

Are there no-credit-check installment loans?

How are installment loans different from payday loans?

Is now a good time to get an installment loan?

Learn more about installment loans

How we made our picks for the best installment loans

Bankrate's trusted personal loans industry expertise

Affordability

Availability

Customer experience

Transparency