Even if you have a little cushion in your budget, covering an unexpected expense like pricey car repairs or emergency medical care can be very challenging.
In that situation, a short-term loan may make sense. A short-term loan is typically an unsecured loan (meaning it doesn’t require collateral) that you must repay within a couple weeks to one year. You can also find loans with longer repayment terms of up to six years.
Short-term loans can be dangerous, especially if they have high interest rates and borrowing limits. Before you apply for a loan, make sure you understand the loan details and select a reputable lender.
Short-term loans can be a valuable financial tool to address various expenses. These loans are a common option for people and businesses that don’t qualify for a traditional personal loan with a longer repayment term (two to five years or more).
You’ll typically need a stable income to qualify for a short-term loan. Many personal loan lenders approve borrowers with bad credit, but a higher credit score will land you a lower interest rate.
Lenders typically make a same-day decision on your short-term loan applications, often within an hour or so. Once approved, you’ll receive your interest rate and repayment term. If you agree with the terms, the lender can usually deposit the funds in your bank account within 24 hours of your loan approval.
Be wary: Some short-term loans — like payday loans and pawnshop loans — are especially risky. While some short-term loans have higher interest rates, they pale in comparison to payday loans, whose exorbitant interest rates and fees can equal an annual percentage rate (APR) of 400%.
Plus, payday and pawnshop loans are usually due in full with your next paycheck. If you can’t repay the loan by then, you risk falling into a debt cycle that can be difficult to escape.
If you want a short-term loan, your best bet is to stick with reputable lenders and only consider loans you can comfortably repay within the designated term.
Below are four Credible partner lenders that provide short-term personal loans, as well as loans with repayment terms ranging from one to six years.
The benefit of a longer repayment term is your monthly payments will be lower. However, you’ll pay more interest over the life of the loan with a longer term.
Best for: Very small and very large loan amounts
A short-term loan from PenFed Credit Union can give you access to significant funding for a large expense, but they also offer small loan amounts. Just be aware that funding can take from two to four business days after verification.
Minimum credit score: 660
Loan amounts: $600 to $50,000
Loan terms: 1 to 5 years
Best for: Borrowers with fair credit
Avant offers a smooth online application and approval process (with funding times as soon as the next business day), but the lender does charge an administration fee of up to 4.75% to process your loan.
Minimum credit score: 550
Loan amounts: $2,000 to $35,000
Loan terms: 2 to 5 years
Best for: Paying off your loan early
With fair credit, you might qualify for a personal loan for just about any purpose, and you can get an APR discount for enrolling in autopay.
Minimum credit score: 580
Loan amounts: $2,000 to $36,500
Loan terms: 2 to 6 years
Best for: Longer repayment terms
Best for: Both unsecured and secured loan options
OneMain Financial offers short-term personal loans to borrowers with less-than-perfect credit. The lender offers both secured and unsecured loans, potentially making it easier to get approved.
Minimum credit score: Undisclosed
Loan amounts: $1,500 to $20,000
Loan terms: 2 to 5 years
Related: Learn more about getting a personal loan on Credible.com
Shopping around and comparing offers from multiple lenders can help you identify the best loan to suit your needs. The following two lenders are not Credible partners.
Best for: Very small loan amounts
Minimum credit score: Undisclosed
Loan amounts: $300 to $9,000
Loan terms: 9 to 49 months
Best for: No fees
Minimum credit score: Undisclosed
Loan amounts: $1,000 to $20,000 ($10,000 in CA)
Loan terms: 6 months to 5 years
Related: Learn more about getting a personal loan on Credible.com
Credible evaluated the best personal loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, and fees. Credible’s team of experts gathered information from each lender’s website, customer service department, and via email support. Each data point was verified to make sure it was up to date.
You can also expand your search to include in-person options. While online lenders often provide a more streamlined application and funding process, you can also find a short-term loan through a bank or credit union.
Every lender has unique eligibility criteria for short-term loans. You’ll typically need to be at least 18 years old and have a valid government-issued ID. Other common requirements for a short-term personal loan include:
| Tip: If you don’t have a good enough credit score or DTI, for example, you might qualify for a loan with the help of a cosigner or co-borrower, who agrees to repay the debt if you can’t. You might also explore secured loans that require you to post collateral, such as cash or a car, to gain lender approval. |
Comparing short-term loan offers is an effective way to discover your loan options and see which loan is best suited to your needs. Here are some loan factors to consider as you compare your short-term loan options:
The process to secure a short-term loan is relatively simple. You’ll generally need to follow these steps:
- Shop around and compare multiple lenders. Research several lenders and identify the best offers by comparing each lender’s interest rates, repayment terms, loan amounts, and fees. Many online lenders allow you to easily prequalify before applying, which won’t affect your credit score.
- Select the best offer: Review your offers and choose the best loan option to address your needs. If you’re not approved for a loan, you might consider adding a co-applicant to your loan.
- Submit an application and any required documents: Enter your personal information, including your contact information, income, and employment history. Be prepared to submit documents that verify the information you provide.
- Receive your funds: If the lender approves your application, you can sign to receive your loan funds. Lenders typically make one lump-sum deposit directly into your account, which can take anywhere from one to five business days. However, some lenders offer same-day funding.
Short-term personal loans can help you access the cash you need, but they’re not for everyone. As with any financial product, it’s wise to weigh the pros and cons before coming to a decision.
If you don’t want to take out a short-term loan, you may wish to explore other options, such as:
Related: Learn more about getting a personal loan on Credible.com