- A personal installment loan is repaid in fixed amounts called installments. The lender gives you all of the money at the beginning, which is why the CFPB calls it a closed-end loan.
- Common extra costs are an origination fee, a documentation fee, optional credit or disability insurance, non-filing insurance on secured loans and late fees.
- The CFPB says to check the loan disclosure and the required loan documents from the lender to see which fees apply.
- If you cannot make a payment, contact the lender early. Options may include deferment, forbearance or a payment plan.
What a personal installment loan is
The CFPB describes a personal installment loan as one you repay in fixed amounts, with the lender giving you all of the money up front. Loans range from several hundred to several thousand dollars or more, with terms from a few months to several years. Payments are generally the same throughout the loan, and interest rates can be fixed or adjustable. People use them for large purchases, unexpected expenses or consolidating existing debt.
Lenders weigh your credit score and reports, your income and debts, the loan amount and length, state interest rate limits and your bank account activity.
Fees that can be added
| Fee | What it is |
|---|---|
| Origination fee | A charge for setting up the loan. |
| Documentation fee | A charge for processing the paperwork. |
| Credit insurance and disability insurance | Generally optional. |
| Non-filing insurance | Listed for loans secured by collateral. |
| Late fees | Charged when a payment is late. |
To find out which apply to you, the CFPB advises checking the loan disclosure from the lender and the required loan documents before you agree to the loan.
An example with numbers
This example is our own arithmetic and assumes a 5% origination fee. Lenders set their own fees, so use the figure in your own disclosure.
| Item | Amount |
|---|---|
| Loan amount | $5,000 |
| Origination fee at 5% | $250 |
| Money you receive if the fee is taken from the loan | $4,750 |
| Amount you still repay | $5,000 plus interest |
If the fee is taken out of the loan, you repay more than you receive. That is why the CFPB tells you to look at fees as well as the rate.
Loans for school are a different category; see federal versus private student loans. For business financing, see SBA 7(a) loans. Credit card interest works differently from a fixed-payment loan, as explained in credit card grace periods and interest.
If you cannot make a payment
The CFPB says to contact your lender early. Options may include deferment, forbearance or a payment plan. Missed payments can lead to collection efforts and be reported to the three major credit bureaus, which can hurt your credit scores. Our guide on what debt collectors can and cannot do covers the rules if a loan reaches collection.
Compare the fees in the lender’s disclosure along with the monthly payment, and keep a copy of the loan documents. Check your credit reports first; our guide to free credit reports explains how.
Frequently asked questions
What is a personal installment loan?
The CFPB describes it as a loan you repay in fixed amounts called installments, where the lender gives you all of the money at the beginning.
What fees can a personal installment loan have?
The CFPB lists origination fees, documentation fees, optional credit and disability insurance, non-filing insurance on secured loans and late fees.
Where do I find out which fees apply?
The CFPB says to check the loan disclosure from the lender and the required loan disclosures and documents before you agree to the loan.
What if I cannot make a payment?
Contact your lender early. The CFPB says options may include deferment, forbearance or a payment plan, and that missed payments can be reported to the three major credit bureaus.
Can the interest rate change?
The CFPB says interest rates on these loans can be fixed or adjustable.
Sources
- CFPB: What is a personal installment loan? (last reviewed August 30, 2024)
- CFPB: Do personal installment loans have fees? (last reviewed August 30, 2024)
Each source was opened and read on October 26, 2026. See how we verify.