A short-term loan is any loan that is paid off within a few months to two years. They run the gamut from payday loans to personal loans, but not all short-term loans are created equally. In fact, there are a number to avoid or at least approach with caution. We'll cover the types of short-term loans available, where to get one, what to look out for, recommended lenders, and how to qualify, especially if you have bad credit.
Types of short-term loans
Some short-term loans, like payday loans and pawn shop loans, are not recommended because of high rates and fees, and too-short repayment terms. As a result, a short-term loan from a predatory lender can trap you in a debt cycle that’s hard to break. However, other loan types like personal loans, payday alternative loans (PALs), some cash advance apps, and even BNPL apps can be an effective and affordable way to get the money you need now.
Personal loans
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Some lenders offers short-term personal loans with repayment terms of one or two years. Loan amounts are often much higher than other types of short-term loans, with minimums starting from $1,000 to $5,000, depending on the lender. APRs max out around 36% on most traditional personal loans, making them a better option than many other short term loans. But the rate you'll get depends on your credit, income, and current debt.
You may not qualify if you have bad credit, but it's worth it to see by prequalifying for a personal loan first. Prequalification is a way to see if you're likely to qualify for a personal loan and what rate and terms you might qualify for. It won't hurt your credit, but most lenders will conduct a hard credit pull when you apply, which could ding your score. Some lenders offer same-day personal loans, and virtually all personal loan lenders report to the credit bureaus, giving you a chance to improve your credit.
Payday loans
Avoid if possible
Payday loan lenders offer small loans, often up to $500, that you have to repay by your next payday. In-store payday loans may have no credit check, but often have very high fees. That paired with a two-week loan term can equate to APRs well over 400%, depending on your state. For this reason, you should only consider a payday loan as a last resort.
Payday alternative loans
PALs are available only from credit unions but are a great option, especially if you have fair or bad credit. There are two types of PALs (I and II), not all credit unions offer both types. Rates are capped at 28% on both, and amounts are available up to $1,000 (I) or $2,000 (II); repayment terms can be as short as one month (I and II) to as long as one year (II). PALs II are available immediately upon joining a credit union; PALs I require that you're a member for at least 30 days.
If you're not currently a member, search for local credit unions offering PALs and see if you qualify for membership. For example, Veridian is an Iowa-based credit union that offers PALs, and membership is open to anyone, regardless of residence.
Pawn shop loans
Avoid if possible
Pawn shops also provide small loans for those who can offer an item of value. If you repay the loan within a certain time frame, you’ll get your item back — if not, the pawn shop can sell it. Like payday loans, pawn shop loans can be very expensive and should be avoided if possible.
Cash advance apps
Avoid expediting funds
Cash advance apps offer a way to get small amounts of money quickly — to be repaid from your next paycheck, like payday loans. Amounts are based on your banking activity and usually top out around $750. There's no credit check. It’s possible to find cash advance apps with no fees. But if you want the money expedited into your account, you’ll generally need to pay a fee to do so, which can make cash advance apps as expensive as payday loans, in some cases.
Credit card cash advances
An option if you can't qualify for a personal loan
If you have a credit card with a sufficient credit limit, you may be able to take out a cash advance at an ATM. Cash advances are a way to get quick cash without having to apply for a loan, and they have much lower rates than payday loans, pawn shop loans, and even some cash advance apps. That said, the APR is likely higher than your card's standard rate, interest starts accruing immediately, and you'll be charged a cash advance fee up to 5% of the amount advanced.
If you can qualify for a personal loan, that will likely be a better option than a cash advance and may have a lower APR. Plus, personal loans charge simple interest whereas credit cards charge compound interest. What that means is that with a credit card, you'll pay interest on any unpaid interest (like if you carry a balance month to month), which can quickly inflate your balance. With a personal loan, you won't.
BNPL
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Buy now pay later (BNPL) apps like Klarna and Affirm offer short-term, often six-week, interest-free loans for a wide range of retail purchases, including common goods like groceries. BNPL can be a great way to get interest-free financing as long as you can pay it off in four equal payments (the first when you take out the loan). APRs for longer terms are often equivalent to personal loan interest rates. Just note that pay-in-four arrangements aren't typically reported to credit bureaus, meaning you won't score any points with timely repayment. If you want to improve your credit, choose a lender that reports the bureaus.
Personal loan scams
While payday lenders and pawn shops are often legal businesses, be alert for outright lending scams. In 2023, The Federal Trade Commission (FTC) reported that consumers lost more than $10 billion to fraud, 14% more than the amount lost in 2022. Bank transfers, cryptocurrency, and online shopping issues were the most common fraud categories. Other common scenarios involve scammers asking for upfront fees prior to the disbursement of any funds, and using email and voice mail to phish for personal information, like your Social Security number, address, and income before funding a “loan.” Be sure to apply through a secure portal and not via email or phone when you apply for a loan.
Red flags may also include offers requiring you to act fast, guaranteed loan approval, or approval with no credit check. If you question whether an offer is too good to be true, contact the FTC.
3 short-term personal loans
You can apply for a short-term personal loan within minutes and get the money as soon as the same day, in some cases. These partner lenders offer fast funding and repayment terms that start at one or two years. That said, none of these lenders charge prepayment penalties, meaning you could pay off the loan even sooner at no extra cost.
Upgrade: Best for fair credit
Best for fair credit
Upgrade
4.5
Credible Rating
Est. APR
8.49 - 35.99%
Loan Amount
$1000 to $50000
Min. Credit Score
600
Pros and cons
More details
Avant: Best for all credit types
Best for all credit types
Avant
3.9
Credible Rating
Est. APR
9.95 - 35.99%
Loan Amount
$2000 to $35000
Min. Credit Score
550
Pros and cons
More details
Zable: Best for short-term loans and same day funding
Best for short-term loans and same day funding
Zable
3.2
Credible Rating
Est. APR
-
Loan Amount
$1000 to $35000
Min. Credit Score
600
Pros and cons
More details
Where to find a short-term loan
Besides online lenders, you can find short-term personal loans at banks and credit unions. You can also find no-credit-check short-term loans from payday lenders and via cash advance apps and title loan lenders. But these options can have astronomical fees in relation to the amount borrowed and very short repayment terms — such as one to two weeks — which can make repayment difficult and lead to a cycle of expensive debt.
Learn More: Where to Get a Personal Loan
How to apply for a short-term loan
When you’re ready to apply for a short-term loan online, follow these steps:
- Check your credit: Your credit score — along with your income and current debt — indicate what types of loans and rates you’re eligible for. If you have a low score, you should eliminate lenders that don’t offer personal loans for fair credit or bad credit.
- Compare lenders: Find lenders that offer the repayment term you want and the dollar amount you need, when you need it. If same- or next-day funding is important, choose lenders that can fund within that time frame. Also consider whether lenders charge any fees, such as an origination fee. An origination fee is usually deducted upfront from the amount you borrow.
- Prequalify: Once you’ve found lenders that suit your criteria, prequalify with them to compare annual percentage rates (APRs) and loan terms. Prequalification won’t hurt your credit, but gives an estimate of what you might qualify for (based on your score and other information you provide). Note that prequalification is not an offer of credit, and once you formally apply for the loan, your credit score may temporarily drop a few points.
- Apply for the loan you like best: After comparing lenders, pick the loan option that works best for you and complete a full application. You’ll need to submit required documentation, such as tax returns and pay stubs.
- Review the loan agreement: If you’re approved, the lender will send a loan agreement for you to review and sign. Only sign if the terms are as expected — pay particular attention to the APR, fees, monthly payment amount, and when payments are due.
- Get your funds: Once you sign for the loan, the lender can send you the money — generally through direct deposit. The time to fund a short-term personal loan can vary from as soon as the same day to up to a week, depending on the lender.
Before you borrow, consider the total cost of a loan over time. You can estimate how much you’ll pay for a loan using a personal loan calculator.
Learn More:
How to qualify for a short-term loan
While each lender has its own requirements, you’ll typically need a couple of things to qualify for a personal loan with a short term:
- Good credit: A FICO score of 670 or higher is typically considered good. Lenders use your credit history to determine your eligibility, APR, and loan terms, such as whether to charge an origination fee and how much. While some lenders work with borrowers who have poor credit, you’ll generally need good to excellent credit to qualify for the lowest rates.
- Verifiable income: Lenders want to see that you can afford a new loan in addition to any other debt you might have. A history of steady and sufficient income can help support that.
- Low debt-to-income ratio (DTI): Lenders also want to see that you aren’t carrying too much debt and can handle monthly payments on a loan. They do this by comparing your current monthly debt payments to your gross monthly income. Ideally, your DTI should be under 36% to qualify for a personal loan.
No-credit-check short-term loans
Short-term loans that don’t require a credit check include payday loans, title loans, pawn shop loans, and loans via cash advance apps. Payday loans and cash advance apps require a source of income, while title and pawn shop loans require collateral. All of these can be easier to get than a personal loan, but they’re also high-risk and can be very expensive.
How to get a short-term loan with bad credit
If you’re struggling to get a personal loan on your own due to credit history or income issues, you have options:
- Consider lenders that offer bad-credit loans: Rates on loans for bad credit are typically high, but still much lower than cash advance and payday loan APRs, as well as less risky.
- Get a secured loan: Some lenders offer loans secured by collateral, such as a savings account or the fixtures in your home. This can make it easier to qualify and reduce your rate.
- Apply with a cosigner: Applying with a cosigner who has good credit can help you get approved or lower your rate. Not all personal loan lenders offer cosigned personal loans, but some do.
Short-term loan alternatives
Short-term loans aren’t your only option for borrowing cash quickly. Here are a couple of alternatives to consider:
- Personal line of credit: Unlike a personal loan, a line of credit gives you access to a credit line that you can repeatedly draw from and pay off. If you’re considering a personal line of credit or a personal loan, keep in mind that a personal line of credit could give you easier access to cash in the future should you need it.
- Credit card: A credit card is another type of revolving credit that is often an easy, quick, and suitable choice for short-term loan needs — especially if you qualify for a 0% APR promotional offer and can pay the amount back within that period.
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