If you need money now, especially if you need cash fast for an emergency, an installment loan could be the answer. These loans are a convenient option when you need to pay for things that fall outside of your usual budget—like car repairs or surprise medical bills. Many are even available through online lenders and come with fast approval and funding times.
But not all installment loans are the same. Some are designed to help with specific things, like the cost of education or home ownership, while others are more versatile. Since there are so many different installment loans, it’s important to choose the best loan—and lender—for you.
With that said, here’s everything you need to know about the most common installment loan types, their benefits and drawbacks, and what to look for when choosing one.
Before taking out any loan, you should know what it is and how it works. So, then, what is an installment loan?
Like most loans, an installment loan is a closed-ended account, meaning you borrow a specific amount of money—usually in a lump sum—and repay it over a set period. This is different from how a personal line of credit works, which lets you repeatedly borrow money up to your maximum credit limit.
Typically, installment loans come with a fixed or variable interest rate. Unlike short-term loan options like payday loans, these loans also have flexible repayment terms ranging from several months to years. This makes them easier to repay over time. They also tend to have fewer lender fees.
There are many different types of installment loans. Each loan’s repayment term, interest rate, fees, purpose, and loan requirements vary based on the loan type.
Whatever you need, chances are you’ll find an installment loan that works for you. Here are the most common types of installment loans to consider.
Many people use student loans to pay for their college education. These installment loans come in many forms, but the main types are:
You can use either federal or private student loans—or a combination of both—to cover school-related expenses like tuition, room and board, and administrative fees.
As with any other installment loan, you make monthly payments on the loan’s principal and interest. With federal loans, you can usually defer payments until you leave school or your enrollment status drops to less than half-time. With private student loans, you may need to start paying while still in school.
If you want to buy a new or used car but do not have the cash on hand, an auto loan could be the solution for you. Auto loans are secured loans that use your vehicle as collateral. As long as you make payments every month until the loan is paid off, you will eventually own the vehicle outright. But if you fail to make payments or default on the loan, the lender could seize the vehicle.
Most auto loans have repayment periods lasting several years, but it’s possible to get a longer or shorter repayment term. They also typically have fixed interest and fixed monthly payments.
Auto loans are also often considered instant loans because you can get one the day you apply. This is especially convenient if you need a vehicle quickly and cannot afford to wait.
Some dealerships offer no-credit-check loans. But you might need fair or good credit to qualify for the best interest rates and terms. Alternatively, you could get an auto loan with a cosigner.
A mortgage loan is another type of secured loan, but this time it’s secured by your house or property. Most mortgage loans come with 15- or 30-year repayment terms. They can have either fixed or variable interest rates.
Like other installment loans, some mortgage loans come with additional fees like an origination fee or annual percentage rate (APR). Many mortgage lenders also tack on other things like attorney’s fees, appraisal fees, or property taxes to the loan.
To get a mortgage loan, you will typically need to give a down payment. The higher the down payment, the smaller the loan. You may also need good credit and several years of verifiable employment history.
Several types of mortgage loans exist, including conventional, FHA, and VA loans. Each loan type has its own terms and eligibility requirements.
Personal loans are one of the most versatile types of installment loans out there. You can use them for nearly any purpose, including debt consolidation, home or vehicle repairs, taxes, and emergencies. You could also use them to pay for a vacation, relocation expenses, or other personal things.
Most personal loans online are unsecured. Because of this, you may need to have better credit to qualify. Your credit score—and sometimes your income—also heavily influences the loan term and interest rate you get. However, you may be able to get personal loans for bad credit. You can get a personal loan online or at a credit union or local bank. Some private online lenders have quick approval and funding times, so you could potentially receive funds the same day you apply.
Installment loans online are often one of the best loans for bad credit. Plus, many online lenders—like Jora—offer fast loans, which is useful if you need emergency money due to an unforeseen expense.
Certain bad credit loan lenders, like Jora, will check your credit score as part of the online loan application process. However, they also consider other factors like your income when deciding whether to lend money. In other words, you could still qualify for a loan, regardless of your credit score or history.
Sometimes, direct lender loans come with additional fees like prepayment penalties or origination fees. Jora’s installment loans do not come with any hidden fees, though. In fact, you’re encouraged to pay off the loan early to cut back on how much you pay in interest.
Many bad credit installment loans are easy loans you can get online. With Jora, for example, you can apply in minutes and get a credit decision as soon as the same business day. You could also receive funds the same day you’re approved if you accept the loan by 10:30 am Central Time (Monday through Friday).*
Unlike some direct installment loans for bad credit, Jora’s loans come with longer repayment terms. This makes these quick loans online a good option for borrowers who need more time to pay off their borrowed money. You can use a bad credit installment loan for many of the same reasons you would use personal bad credit loans. This includes covering sudden bills, rent, getting furniture, and more.
If you’re thinking about applying for an installment loan, there are several factors you need to consider first. Weighing your options and comparing different loan offers can help you make an informed decision that works with your unique circumstances.
Installment loans, whether online or through a bank or credit union, typically come with an interest rate. There are two main types of interest rates—variable and fixed—but each is represented as a percentage.
Many loans also have an annual percentage rate (APR). The APR includes the interest rate plus any additional fees. The interest rate is one of the biggest factors that affects your monthly payment amount and how much you pay over the life of the loan. The lower the interest rate, the less you’ll end up paying on the loan.
The term length refers to how long it will take to pay off the loan, provided you do not miss any payments or repay it early. Every loan comes with its own term length.
For example, title loans typically come with a 30-day term, while most in-person or online payday loans come with a 14 to 30-day term. Pawnshop loans also tend to come with short repayment terms, which is why it might be better to avoid them or find other ways to get cash. Installment loans, even loans for people with bad credit, come with a longer repayment period.
The loan term can heavily influence your payment amount. Generally, the longer the term, the lower your payment will be. A longer repayment term could mean paying more in interest over the life of the loan, though. That’s why it’s a good idea to try to pay off the loan early—as long as there’s no prepayment penalty.
Some lenders charge additional fees, such as an origination fee, prepayment fee (for paying off the loan early), or administrative fees. Certain loan types, such as mortgages, may come with other fees.
Your lender may add these fees to your loan, which could increase your loan term or monthly payment amount. Or they might charge them upfront. Read through the loan documents and make sure you understand the lender’s fees before signing up for anything. If you’re looking for a bad credit installment loan with no fees, consider applying for a loan through Jora.
Personal installment loans are either secured or unsecured.
Secured loans require collateral to get them, which could be something like a paid-off vehicle or a house. These loans are often easier to qualify for since they’re less risky for the lender. This also means you could get them even with bad credit. However, if you fall behind on payments, you could lose the collateral. Common examples of secured loans include mortgages, 401(k) emergency loans, and auto loans.
Unsecured loans do not require collateral. Since this makes them riskier to the lender, the lender might charge a higher interest rate. Or they might only lend to borrowers with good credit and income. Student loans and most installment loans are unsecured.
Eligibility Requirements Eligibility for a loan depends on the lender. While credit score—and credit history—tend to be the most important factors in determining whether to lend to a borrower, they’re not the only ones. Some lenders—like Jora—will use the applicant’s credit score as part of the decision-making process but not the entire thing.
Other factors that might go into a lender’s decision-making process include the borrower’s current income, employment status, and any assets or debts they have.
There are many advantages to taking out an installment loan. Here are the main ones.
Direct installment loan lenders often offer funds quickly. For example, you could get an auto loan while you’re still at the dealership. Or you could apply online and receive funds that day or the following day.
For many people, a fast cash loan could be all they need to avoid expensive late fees or damaged credit. It could also benefit those facing financial hardship like a lost job or sudden family emergency.
If you need an installment loan right now, apply now through Jora.
Lenders like Jora have a quick—and simple—application process that only takes you a few minutes to complete. This removes the stress of finding the financing you need and significantly reduces the wait time.
Most installment loans, including personal loans for bad credit, come with much flexibility. This includes flexible loan terms designed to work with your schedule and budget. And, since you can use the funds for nearly anything (in most cases), you can take care of what you need.
With the right lender, you can borrow exactly what you need. Whether you need a few hundred dollars to help get you through to your next paycheck or a larger loan for a big-ticket item, you have options.
Installment loan lenders often report both the loan and your payment activity to the credit bureaus. If you make on- time, monthly payments, you could start building—or repairing—your credit score over time. This could also help you qualify for other types of loans or lines of credit in the future.
As with any form of financing, installment loans also have a few drawbacks. Here are the biggest ones to consider. Eligibility Requirements May Be High
Depending on the loan type and lender, you could face higher eligibility requirements, like good credit or a low debt-to- income ratio. While some lenders let you apply with a cosigner to boost your approval odds, this is not always the case.
The good news is that there are personal bad credit loans for borrowers who do not qualify for traditional financing options. Jora, for example, considers the applicant’s credit and financial profile rather than just their credit score. This can make it easier to get funds now while you work on improving your credit score.
Installment loans are not open-ended accounts, meaning you cannot add to the loan amount even if necessary. Instead, you will have to apply for a new loan.
Lender’s fees and interest rates depend on the lender and the installment loan you’re getting. Use an installment loan calculator to determine what your total monthly amount and loan payoff amounts will be. That way, you can be as prepared as possible when applying.
If you’re ready to apply for an installment loan, here’s how to do it:
If you’re applying for a mortgage or auto loan, consider prequalification. This lets you see what types of loans you might qualify for, and at what rates, without hurting your credit score.
Jora's application process is even easier. Learn more about how it works.
Just as your credit score can affect your installment loan, an installment loan can also affect your credit score in several ways. These include:
Jora offers two types of loans, depending on your state of residence – installment loans and lines of credit. To see which type of loan is offered in your state, please view the What it Costs page and select your state.
Jora Credit is the Lender. Jora Credit operates under state specific companies, licenses, and rules for the states that it services. Jora Credit does not lend or arrange loans or lines of credit in all states. Please see What it Costs for the serviced states and applicable terms.
There are many installment loan types, including bad credit online loans and other in-person or online loans. These loans are versatile and can work as emergency loans. Or you can use them for car or home repairs, surprise medical bills, and more.
If you’re looking for a flexible loan with fast approval and funding times, apply now through Jora. You could receive the financing you need quickly, even with poor or limited credit.