Single payment loans

By Matt Mayerle
Modified on May 23, 2023
single payment loans

Single-payment loans are one option for cash when you’re facing a financial emergency. But what are they? What interest rates do they carry? And are these short-term solutions right for you? CreditNinja wants to help you answer these questions.

Financial emergencies happen every day. Most people experience financial hardship at some point in their lives. There are trustworthy loans out there for these situations, but there are also a lot of predatory ones.

Learning the red flags of short-term lending is the best way to avoid a scam. Read on to learn about these loans and the lenders that offer them.

What Is a Single-Payment Loan?

A Single-payment loan is any loan that a borrower pays back with one lump-sum payment, as opposed to many payments over several months. There are a few examples of these loans, but the thing they all have in common is a lump-sum payment at the end of the loan term.

Most loans require several payments, usually monthly. These are referred to as multiple-payment loans, or more commonly “installment loans.” Many financial products fall into the category of “installment loan,” including mortgages, auto loans, loans from banks or credit unions, as well as several others.

A single-payment loan tends to appeal to borrowers who have less-than-perfect credit. This means your credit score, calculated by the three credit bureaus, tells lenders you might not be the best borrower.

Having a low credit score can lead to fewer borrowing options. And many single-payment loans have less stringent qualifications than monthly installment loans. This makes them more accessible for people with poor credit.

Examples of Single-Payment Loans

There are a few common loans that qualify as single-payment loans. Knowing the differences will help as you compare interest rates, and shop for the right personal loan for you.

Payday Loan

A payday loan is a short-term personal loan for borrowers who require extra cash in order to get to their next payday. They’re usually small-dollar loans, ranging up to a few hundred dollars in most cases. They also tend to carry high interest rates, compared to an installment loan.

You can find these loans online, or at storefront locations. If they approve your application, you can receive money quickly, sometimes within a day. Then you have about two weeks to repay the loan, depending on the terms. You make one lump-sum payment on the due date to return the loan principal plus interest and fees. Once it’s paid back the contract ends.

Title Loan

This is another example of a loan you may come across. This is considered a “secured loan,” meaning you will need collateral. The collateral, in this case, is the title to your vehicle.

You offer your title to the lender, in exchange for a cash loan. Your loan will be based on the value of the vehicle. Typically, lenders will offer you a principal amount that is equal to a fraction of the value. After approval, the lender gives you the money and you have a set amount of time to repay it. You may get up to a couple of months to repay it.

The problem with title loans is that not repaying on time—or at all—could result in the lender taking your vehicle, and it’s completely legal. Because the title acts as collateral, the business has a legal right to seize your vehicle and sell it to recover their loss. Always review the terms and conditions before getting one.

Pawnshop Loan

These are secured loan products with a single payment at the end of the term and a high interest rate. In this case, the collateral can be almost any item of value. A pawnshop business, as you probably know, is a store where people buy and sell personal items, electronics, jewelry, etc. They also offer short-term loans to people who need cash, but they require collateral.

They work the same way a title loan does. You offer up a valuable item. The lender assesses the value and gives you cash based on that evaluation. Once you receive the cash, you have a set amount of time to pay it back. If you can’t pay back the Principal, the lender may take it and sell it to recover their money, depending on the terms of the contract.

Like with title loans, it can be risky to use valuable items as collateral. This should be a last resort, and shouldn’t be considered unless you’re 100% sure you can pay it back.

Pros & Cons of Single-Payment Loans

The benefits of a single-payment loan may not outweigh the negatives. This is because many of these are designed for borrowers with poor credit. And since these borrowers may not have other options available to them (like bank or credit union loans, or an installment loan) some lenders raise their interest rates. The pros and cons of a single-payment loan are important to know before choosing one:


  • Get a loan in a hurry, sometimes within a day
  • May help with financial emergencies
  • If paid on the due date, they may help your credit report (if the company reports information to the credit bureaus)
  • Available to borrowers with poor credit
  • You may be approved with no job or credit, depending on the lender


  • Short repayment terms make it difficult to pay the loan when it’s due
  • They carry higher interest rates than bank or credit union loans
  • Paying late can add fees and interest
  • If it’s a secured single-payment loan, the company may take your collateral
  • These services may trap you in a cycle of debt

Is a Single-Payment Loan Right for You?

The thing to remember for any loan—single-payment or otherwise—is that your credit score is affected by late and missed payments. Paying on time is key. No matter which loan you choose, be sure you have the income to afford the payments and interest rate.

Installment loans tend to be better for a consumer than a single-payment loan. For example, the difference between a single-payment loan and an installment loan is that an installment loan allows the borrower to spread their repayment out over time. Paying a loan off over several months tends to make the payments smaller in most cases.

Whether you’re applying for an installment loan, a single-payment loan, a new credit card, a line of credit, or other financial services—always be sure you can pay on the due date. It’s best to review every aspect of the information in the contract before giving them your business. And never take out a new loan you’re not sure about.

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