ZelphinaInstallment loans explained
What an installment loan is, what it costs, and the questions to ask before you sign.
Key points
- With an installment loan you get a lump sum and repay it in fixed amounts, called installments, over a set period.
- Terms can range from a few months to several years, and amounts from a few hundred to several thousand dollars or more.
- Check whether the rate is fixed or adjustable, the APR, and every fee before you sign.
- Add-on products such as credit insurance are generally optional. You can say no.
How installment loans work
A personal installment loan gives you money up front that you repay in equal scheduled payments until the loan is paid off. Each payment covers part of the amount you borrowed plus interest. Because the payment usually stays the same, it is easier to budget for than a balance that changes from month to month.
Lenders typically look at your credit reports and scores, income, existing debts, and the amount and length of the loan. State laws also limit the rates some lenders can charge, so offers can differ from state to state.
Fees to ask about
| Fee or product | What it is |
|---|---|
| Origination fee | A fee for making the loan, which adds to the total cost and may be deducted from the amount you receive. |
| Documentation fee | A charge to process the loan paperwork. |
| Late fee | Charged when a payment is late. |
| Credit or disability insurance | Add-on coverage that is generally optional. It increases what you pay. |
Short-term loans: be careful
Some lenders offer short-term loans with very high APRs. Short-term loans are not a long-term financial solution. Before you borrow, compare the APR and the total amount you will repay, and make sure the payments fit your budget for the whole term. If a payment would be hard to make, talk to the lender before the due date, or contact a nonprofit credit counselor.
Checklist before you sign
- What is the APR, and is the rate fixed or adjustable?
- What is the payment, how many payments are there, and what is the total I will repay?
- Which fees apply, and are any of them taken out of the loan amount?
- Is there any add-on insurance in the contract, and can I remove it?
- What happens if I pay early or late?
Exploring installment loan offers?
Choose Personal loan on Zelphina to see partner offers. Each provider sets its own eligibility, rates and terms, which vary by state.
Explore options on Zelphina