We investigate the dynamical instability of Bose-Einstein condensates (BECs) with higher-order interactions immersed in an optical lattice with weak driving harmonic potential. For this, we compute both analytically and numerically a modified Gross-Pitaevskii equation with higher-order nonlinearity and external potentials generated by magnetic and optical fields. Using the time-dependent variational approach, we derive the ordinary differential equations for the time evolution of the amplitude and phase of modulational perturbation. Through an effective potential, we obtain the modulational instability condition of BECs and discuss the effect of the higher-order interaction in the dynamics of the condensates in presence of optical potential. We perform direct numerical simulations to support our analytical results, and good agreement is found.