Are you in need of a smarter way to tackle unexpected expenses?
Installment loans have become one of the most favored solutions among the American population. With an outstanding 24.8 million Americans currently subscribed to personal installment loans, the industry clearly has something to offer.
The good news is this:
Installment loans have predictable payments, flexible terms, and can help you take on everything from debt consolidation to home improvement jobs.
In this handy guide, I will outline the key benefits of installment loans and explain exactly why they might be the right choice for your next loan option.
Guide to installment loan benefits will cover:
- What Are Installment Loans & Why They Matter
- The Top Benefits of Choosing an Installment Loan
- How Installment Loans Help Build Credit
- Managing Your Installment Loan Payments
What Are Installment Loans & Why They Matter
An installment loan is a type of personal loan where you borrow a certain sum of money upfront and pay it back in fixed monthly installments until the full loan balance and the accrued interest is repaid in full.
Easy right?
The key is that the money you borrow comes in the form of a fixed loan amount, not a credit line. You aren’t continuously borrowing like with revolving credit. Instead, you know exactly how much you need to pay each month until the debt is fully repaid.
Think of it like this: whether you’re handling a financial crisis, need home repairs, or are trying to refinance high-interest debt, an installment loan gives you some breathing room. Many Ohio companies offering installment loans offer quick approval, flexible terms, and easy payments that can fit into any budget.
Installment loans come in all shapes and sizes. Whether it’s a personal loan, auto loan, or mortgage, these loans all share the same core benefit…
Predictable monthly payments that you can budget for.
The Top Benefits of Choosing an Installment Loan
So what makes millions of Americans reach for installment loans every year?
Let me lay out the biggest benefits…
Fixed Payment Schedules You Can Count On
This is likely the most attractive benefit for installment loans.
You will know exactly how much you owe every month. Period. You won’t be surprised by minimum payments going up and down, like with credit cards. You’ll have a single payment that you know can fit into your budget each month.
For example, if you were to take out a $10,000 installment loan at a fixed rate over 36 months, that payment never changes from the first month to the thirty-sixth. It makes financial planning so much easier.
And there’s even better news…
The fixed payment means you can automate it. Set up autopay once, and you never need to think about that monthly payment again. You can avoid late fees and improve your credit score with a simple automatic payment.
Lower Interest Rates Than Credit Cards
Credit cards are infamous for their interest rates.
Average APRs hover around 16-20%, and the longer you carry a balance, the more expensive it gets. Installment loans almost always offer lower rates, especially if you have at least fair credit.
Let that sink in: Why would you pay 18% interest on credit card debt when you could instead consolidate it with an installment loan at 10-12%? The difference can save you hundreds, if not thousands of dollars over time.
It’s a big reason people take out installment loans to consolidate debt. The goal is to replace expensive debt with cheaper debt. Very smart.
Access to Larger Amounts of Money
Credit cards have limits. Personal lines of credit have limits. Installment loans?
Installment loans can give you access to significantly larger amounts of money when you need it. You can borrow anywhere from a few thousand dollars to more than $100,000, depending on your credit and income.
Imagine you need $15,000 to complete a major home repair or renovation. Most credit cards simply won’t provide that much credit (and if they did, the interest rate would be outrageous). An installment loan makes this kind of large purchase more manageable with affordable payments over the course of several years.
More Accessible for Various Credit Scores
Did you know one of the biggest reasons most people are getting installment loans instead of other credit?
Installment loans are often more accessible than other types of credit, even if your credit is less than perfect. While some traditional bank loans might have stricter credit score requirements, most installment loan providers work with borrowers at every point of the credit spectrum.
Granted, the better your credit, the better the rates you will get. But the point is that you can qualify even if your credit history has had a bumpy road. Many lenders look at your overall financial picture, including income and employment stability, not just your credit score.
Installment loans become a practical and useful option for people who are just starting out or who are rebuilding their credit.
How Installment Loans Help Build Credit
Looking to boost your credit score? Installment loans can be a great tool.
Here’s how it works: Payment history is 35% of your credit score. That’s the largest factor. If you make on-time payments every month on an installment loan, you are building positive payment history.
Every month you pay on time, you are demonstrating to the credit bureaus that you can handle debt responsibly. It steadily and consistently improves your credit score over time. Pretty cool, right?
But there’s one more benefit too…
Diversifying Your Credit Mix
Credit scoring models like to see diversity. If all you have are credit cards, adding an installment loan to your credit mix can actually boost your score. It demonstrates to lenders that you can successfully manage various forms of credit.
The current total of outstanding installment loan debt in America stands at $257 billion as of Q2 2025. The number shows just how many Americans are using these loans as part of their financial strategy.
Lowering Your Credit Utilization
If you use an installment loan to pay off credit card debt, you instantly reduce your credit utilization ratio. In other words, the amount of credit you use versus your total credit available.
Lower utilization = higher credit score. Simple.
Managing Your Installment Loan Payments
Getting an installment loan is just the first step.
Here are some tips on how to handle it properly:
First and foremost, always pay on time. Set up automatic payments if possible so you never risk missing a payment date. Miss a payment, and you’ll be hit with late fees, your credit score will take a hit, and you will pay more interest in the long run.
Second, consider making extra payments if possible. Many installment loans do not have prepayment penalties which means you can pay it off early and save money on interest. Paying an extra $50 or $100 per month can significantly reduce the loan term.
Third, track your loan balance and interest. Most lenders have online portals where you can see exactly how much you still owe, how much interest you are paying, and when your loan is expected to be paid off. Check this frequently to stay on top of your progress.
And this is the best part…
Managing an installment loan properly doesn’t just help you get out of debt. It also helps you develop the discipline and budgeting skills that you will benefit from years later. You learn to set financial goals, stick to a budget, and enjoy the satisfaction of seeing debt vanish.
Final Thoughts
Installment loans are a useful way to manage large expenses, consolidate debt, and even build credit. Predictable monthly payments, lower rates than credit cards, and flexible loan terms can give you the financial flexibility you need when you need it most.
The key to success with installment loans is simple: borrow only what you need, make your payments on time, and use the loan as a financial tool to improve your situation.
