An installment loan is any type of loan that is paid back to the lender within a set period of time, such as five years. Personal loans, auto loans, business loans, student loans, and even mortgages are all considered installment loans.
When most people think of installment loans, they are thinking of personal loans. A personal loan is usually an unsecured loan (meaning you do not need to use your house or vehicle as collateral) and comes with a fixed interest rate. Interest rates will vary depending on the market and your individual credit score. Borrowers with good to excellent credit scores will receive the best rate on their personal loan or any other type of installment loan.
In addition to your credit score, when applying for an installment loan lenders are going to look at your annual income and your debt-to-income ratio. If your debt is too high for your income level, you may not qualify for a loan. Before applying, pay down as many debts as you can, keep your credit card balances low and remove any errors or old inquiries from your credit report to ensure you get the best rate possible on your installment loan. To learn more about our installment loans, view LendingTree's article, Installment Loans: Learn about the 6 different types.