Best Short-Term Loans in 2024 | LendingTree (2024)

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There is no standard definition of short-term loan, but generally, it’s a personal loan with short repayment terms. A term is the amount of time you have to repay your lender, and you choose it before the lender finalizes your loan. Sometimes, you can refinance a personal loan after the fact to make your term longer or shorter.

Short loan terms can range between 12 and 36 months, though they may be even shorter depending on the lender and type of loan. Short-term loans may also come with higher minimum monthly payments, but you’ll pay less interest than you would with long-term loans.

Some lenders will allow you to modify your loan in the middle of your term; others are less flexible. In other words, you should choose a loan term you can handle — you might be stuck with it.

Like any financial product, short-term loans come with pros and cons. Consider below:

Comparing short-term loans can be confusing, especially if this is your first time borrowing money. Referencing the definitions below while reviewing your loan offers might make the process easier.

• Loan term length: Your loan term length is the amount of time you have to repay what you borrowed. Choosing the best loan term can be a balancing act. A longer loan term means you’ll pay more interest, but a short-term loan has higher monthly payments. Use our personal loan calculator to see how different term lengths can affect the total cost of your loan.
• APR: Annual percentage rate (APR) is the overall cost of your loan, including your interest rate and fees. The lower your APR, the more affordable your loan. Since borrowers with higher credit scores are statistically less likely to default on a loan, lenders give them the lowest APRs.
• Funding timeline: This measures how long it will take for you to receive your funds. This metric may be especially important if you need an emergency loan. When reviewing funding timelines, be sure to account for the amount of time a lender needs to provide its approval decision, as well as how long it takes to disburse your funds.
• Fees: Some lenders charge more fees than others. Keep an eye out for origination fees, or an upfront fee that the lender deducts from your total loan amount. While less common, some short-term loans come with a prepayment penalty. This is an extra charge for paying your loan off before the end of your term.
• Repayment experience: Everyone likes to do business differently. If you usually make online payments on your other bills, you may want to check out lenders’ mobile app reviews. If you enjoy doing business one-on-one, a bank or credit union might be more your style. Make sure a lender can meet your preferences before signing on the dotted line.

Taking out a short-term loan with bad credit may be possible, but you might want to take the steps below to boost your personal loan approval odds.

• Check your credit score. Checking your credit score before applying for a loan can help you weed out the lenders that you probably aren’t eligible for. This is especially important if the lender doesn’t offer prequalification (since you’ll have to submit to a hard credit pull to check your eligibility).
• Make on-time payments. Your credit score is calculated using several metrics. Of them, your payment history is the most significant (it makes up 35% of your score). Suffice it to say, making your payments on time is essential if you’re trying to improve your credit.
• Pay down existing debt. Many lenders review your debt-to-income ratio (DTI) to help determine your ability to repay a loan. Your DTI compares how much money you make to the amount you spend. Lenders typically consider a DTI below 35% “good.” If yours is 43% or higher, you may want to pay down some of your current debt.
• Target bad-credit lenders. If you don’t meet the personal loan requirements for more traditional lenders, you may need to apply with those that specialize in bad credit. Do note that while you may find a willing lender by using this tactic, you’ll likely face higher APRs.

Short-term loans can be helpful, but this product is often used in predatory lending. To avoid being taken advantage of, you might want to avoid a short-term loan if it also:

Doesn’t require a credit check

Carries an APR above 36%

Comes with a prepayment penalty

Requires a days- or weeks-long loan term

Has a lot of negative feedback on the Consumer Financial Protection Bureau’s complaint database

If your short-term loan comes with any of these red flags, you might want to move on to another lender. A predatory loan (such as a payday loan) will likely leave you worse off than where you started.

Thanks to excessively high APRs or extra-short repayment terms, we recommend skipping many of the short-term loans below. Still, knowing what’s out there could help you avoid the cycle of debt.

• Paycheck advance
• Credit card cash advance
• Pawnshop loan
• Car title loan
• Payday loan

Paycheck advance

Some employers may let you take a paycheck advance, which is like getting paid before you’ve completed the work. With this type of loan, you’ll be borrowing a portion of your next paycheck. This can be handy in the present moment, but not so much for your future self.

Employers are not allowed to make a profit through paycheck advances, but they can charge a fee or interest to pay for the extra accounting needed to provide this short-term loan.

Not all employers allow paycheck advances, but there are mobile paycheck advance apps that can help you borrow funds sans credit check. When you get your next paycheck, the amount you borrowed will be deducted from your account, usually with no fees or interest.

Paycheck advance apps usually only lend a couple of hundred of dollars at a time, at least to start. Take the mobile app EarnIn. When you first sign up, you can only borrow up to $100. But over time, you may be able to increase your paycheck advance amount, up to $750.

Credit card cash advance

You can borrow against your current credit card and get a cash loan by taking a cash advance. Since you’ve already been approved for the card, you don’t have to go through another credit check to get this short-term loan.

You may be able to withdraw funds from an ATM using your credit card that allows credit advances or through a convenience check sent by the credit card company. How much you can access generally depends on your credit limit, but some lenders may have a separate cash advance credit limit.

Beware: Using your credit card to get access to cash can be expensive. You’ll probably have to pay extra fees, but companies might charge a higher interest rate, too. That interest also begins to accrue immediately, leading you to owe more than you borrowed by your first billing cycle.

Pawnshop loan

If you have a valuable item — such as jewelry or a musical instrument — that you’re willing to risk, you could get a pawnshop loan. With this short-term loan, you’ll use your valuable item as collateral. If you can’t hold up your end of the loan, the pawnshop gets your item (for good).

To make a profit, pawnshops usually offer loans for 25% to 60% of your item’s worth. Since the pawnshop undervalues your collateral, you might be forced to put up something very valuable to get the loan amount you need.

According to the National Pawnbrokers Association, the average pawnshop loan is $180, and the shop will usually require you to pay back your loan within 30 days. Most pawnshops don’t charge interest, but don’t think you’ll get away scot-free. Instead of interest, they’ll charge fees. Many times, these fees reach predatory levels.

On the plus side, you don’t need to pass a credit check to get a pawnshop loan. Also, defaulting or making late payments won’t impact your credit score.

Car title loan

Car title loans are another type of short-term loan that requires collateral. This time, you’ll use your car title, motorcycle title or truck title rather than a valuable personal item. Like pawnshops, car title loan lenders undervalue your collateral, typically to the tune of 25% to 50%.

Since the lender knows it can recoup some of its losses through repossession, it doesn’t check your credit or have stringent requirements. On the other hand, you may lose your vehicle if you don’t make payments. Title loans also come with fees that may equate to 300% APR, and you’ll probably only have 30 days or less to pay back what you borrowed.

Payday loan

Payday loans are similar to paycheck advances, but they’re offered by lenders rather than your employer or an app. These short-term loans have lax requirements. You usually only need to provide proof of income and have a bank account — no credit check is required.

While these loans are easy to get, payday loans come with colossal interest rates, like 400% APR. Payday loans typically come with a fee between $10 and $30 for every $100 borrowed, but this depends on state laws. You might also face fees for accessing your loan through a prepaid debit card, if that’s how you opt for payment.

Even though you’ll pay dearly for a payday loan, you’ll only get a small amount of money in return. While this varies by state, $500 is a common loan size. You’ll also need to repay your loan (plus interest) in one lump sum, usually through your next paycheck.

We reviewed more than 28 lenders to determine the overall best short-term personal loans. To make our list, lenders must offer personal loans with a minimum term between 12 and 36 months. The lender must also offer competitive annual percentage rates (APRs). From there, we prioritize lenders based on the following factors:

• Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
• Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
• Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.