What is an installment loan?
Borrow a set amount up front, then pay it back in equal chunks on a fixed schedule. Every payment chips away at both the principal and the interest. Your APR gets locked in the day the loan starts — it doesn't drift up or down. Make that last scheduled payment and you're done; the balance is cleared in full.
A payday loan works nothing like that. There the whole principal plus the fee comes due in a single shot, usually about 14 days out. A credit card is its own thing too — open-ended revolving debt, with a minimum payment that can move from month to month.
Installment loans stretch across the whole credit spectrum. At the top, borrowers with FICO 700+ can land 8%–25% APR from prime lenders — banks and online names like SoFi, LightStream, or Marcus. Drop under FICO 600 and you're in subprime territory, where shops like OppLoans, NetCredit, Rise, and CashNetUSA quote 65%–199% APR. That subprime tier is the part Big Daddy Loans's network handles. If you're a prime borrower, we point you to a marketplace instead.
Why installment beats payday when you can wait a week
The math is simple but worth working through. A $500 payday loan in Texas at $22 per $100 over 14 days costs $110 in fees. If the borrower can't repay in full (the typical case — 80% of payday loans are re-borrowed within 14 days per CFPB data), the loan rolls; fees compound. Four rollovers and the borrower has paid $440 in fees on $500 principal — still owing the principal.
A $500 installment loan at 99% APR over 4 months has an average monthly payment of about $152 and total interest of about $108. The borrower repays $608 total — done in 4 months, with the principal extinguished on schedule. On-time payments report to bureaus and build credit.
The catch: installment underwriting takes longer. Most installment lenders need 1–3 business days to fund. If your bill is due tomorrow, payday is your only fast option — and you should still strongly consider an EWA or a credit-card cash advance first.
Installment APR ranges by state
Where you live sets the ceiling. Each state's usury cap and small-loan act decide how high an installment loan's APR can legally go. The table below pulls from state regulator filings to show two things at once: the legal cap, and what subprime online lenders actually charge in the 10 states that see the most loan volume.
| State | Subprime APR range | Common loan size | Reports to bureaus? |
|---|---|---|---|
| Texas | 99%–199% (CSO model) | $500–$2,500 | Most yes |
| California | 35.99%–99% (CFL ≤$2,500: capped 36%+admin) | $500–$5,000 | Yes |
| Florida | 30%–99% (consumer finance act) | $1,000–$25,000 | Yes |
| Ohio | 28%–60% (post-2018 reform) | $500–$5,000 | Yes |
| Missouri | up to 199% | $500–$5,000 | Mixed |
| Illinois | 36% cap (PLPA 2021) | $500–$40,000 | Yes |
| Colorado | 36% cap | $500–$40,000 | Yes |
| Nevada | up to 199% | $500–$5,000 | Mixed |
| Alabama | up to 99% | $500–$3,000 | Yes |
| New York | 16% civil / 25% criminal usury cap | Mainstream only | Yes |
Subprime online installment lenders — how we rank them
Money we make never moves a lender up our list. What does? Four things, ranked in this order: first, how many states the lender is licensed in. Second, whether they're upfront about APR and fees. Third, whether they report to the bureaus. Fourth, how they handle it when you pay off early.
| Lender | APR range | Loan size | States served | Bureau reporting |
|---|---|---|---|---|
| OppLoans | 59%–160% | $500–$4,000 | ~37 | Yes (Experian, TransUnion) |
| NetCredit | 34%–99.99% | $1,000–$10,000 | ~36 | Yes |
| Rise Credit | 50%–299% | $500–$5,000 | ~31 | Yes |
| CashNetUSA | 65%–149% | $500–$3,500 | ~24 | Yes |
| Possible Finance | ~150% (small dollar only) | $500 | ~25 | Yes |
| OneMain Financial | 18%–35.99% | $1,500–$20,000 | ~44 (incl. brick & mortar) | Yes |
These numbers are current as of May 2026. Rates and the list of states a lender covers shift often, so pull up the lender's "Rates and Terms" page and confirm before you apply.
$500 installment vs $500 payday — the math in detail
Here's a real-world case. Say $500 is what you need right now, and your budget can handle $130–$185 each month toward paying it back. Watch what the numbers do.
| Option | APR | Term | Monthly | Total interest | Total paid |
|---|---|---|---|---|---|
| Payday (TX) — one cycle | ~576% | 14 days | — | $110 | $610 |
| Payday rolled 4× | ~576% effective | ~75 days | — | $440 | $940 |
| Installment 199% APR | 199% | 4 months | ~$181 | ~$223 | ~$723 |
| Installment 99% APR | 99% | 4 months | ~$152 | ~$108 | $608 |
| Installment 65% APR | 65% | 6 months | ~$100 | ~$104 | $604 |
| Installment 35% APR | 35% | 6 months | ~$92 | ~$54 | $554 |
| PAL II | 28% | 6 months | ~$90 | ~$43 | $543 |
Start at the cheap end. A PAL costs you the least of any non-prime path here. Move up the ladder and every single installment option still comes out ahead of a payday loan you keep rolling over. Push that all the way to the ugliest subprime rate on the board — 199% APR over four months — and it's still less money out of pocket than a payday loan rolled four times. The takeaway is plain: rolling over is what makes payday the most expensive choice of all. Want the full breakdown on PALs? Read our guide to how PALs work.
Cheaper alternatives to subprime installment
1Credit-union PAL II
No subprime installment lender comes close on price. The APR is capped at 28%, you can borrow $200–$2,000, and you pay it back over 1–12 months. Read how PALs work.
2Credit-card balance with payment plan
Already carry a card? Even a steep 29% rate on it still saves you money next to a 99% installment loan. And a number of issuers will let you split an existing balance into fixed payments.
3Secured loan from your credit union
Got money in savings? Borrow against it with a share-secured loan and you're looking at 4–10% APR.
40% medical / dental payment plan
When the bill is for healthcare, call the provider's billing office first — many will set up 0%-interest installments.
Browse all 15 ranked alternatives →
State guides for installment loans
- Texas installment loans — the CSO model and what APRs to expect
- Florida installment loans — how the Consumer Finance Act applies
- Ohio installment loans — the short-term loan act after 2018
FAQ — Installment loans
How fast do installment loans fund?
Plan on 1–3 business days from most subprime online installment lenders. A few promise same-day or next-day money. Why the wait? They underwrite harder, and that extra check is exactly what earns you the lower APR. You pay in time instead of dollars — a real trade-off.
Can I pay off an installment loan early?
You can, and you should. Every state-licensed installment lender in the Big Daddy Loans network skips prepayment penalties, so paying ahead cuts the interest you owe. Do it any time you can swing it.
What credit score do I need?
Most subprime installment lenders work with FICO 500–620. Drop below 500 and the list gets short, but you still have choices. Clear 620 and you're usually in mainstream territory — cheaper loans we don't match — so head over to our guide on borrowing with bad credit.
Will an installment loan help my credit?
It can. Most state-licensed installment lenders report to at least two of the three major bureaus. Pay on time and your credit grows; pay late and it takes a hit. That reporting is a big reason installment beats payday.
Are online installment loans legal everywhere?
All 50 states allow installment loans. What changes state to state is the APR cap. Where caps sit at 36% — NY, IL, CO and 33 others — the subprime crowd simply can't make the math work, so you'll only find mainstream lenders.
What if I miss a payment?
First comes a late fee, usually $25–$50. Hit 30 days late and most lenders flag the delinquency to the bureaus. Reach 90 days and the account typically charges off and gets handed to a collection agency. The fix is simple: call your lender before the due date slips — most run hardship programs for exactly this.