Are you looking for a convenient short-term loan for your emergency expenses? BadCredify has compiled the top five selections for the finest lenders that provide short-term loans, detailing what sets each apart.
Most loan providers have a minimum credit score requirement; you must have a fair credit score (580 – 669). We’ve also described the other factors that should be considered when you apply for short-term personal loans: interest rates, repayment terms, and available loan amounts.
Best Short-Term Personal Loans for Fair Credit in 2024
BadCredify evaluates lenders based on more than 70 rating criteria, including interest rates, repayment terms, eligibility requirements, fees, consumer experience, affordability, and more. Find out more about our full methodology.
What are Short-term Loans?
Short-term loans don’t have a specific definition, but generally, they are personal loans with shorter repayment terms. The typical loan terms range from 12 to 36 months. However, short-term loans may have even shorter terms, depending on their type.
A short-term personal loan may have higher monthly payments, but the borrowers will pay less interest than they would pay with a long-term repayment schedule.
How Does a Short-Term Loan Work?
Short-term loans work as simple as the other loan products. Here is the working process described:
- Application. You apply online or offline by providing the needed information about you and your bank account and submitting the loan request form.
- Loan approval decision. You wait for the lender’s answer that will send it to your email address or will tell you in person.
- Loan agreement. If approved, you review the loan offer, and if you agree, sign the loan agreement.
- Personal loan funding. After all formalities, the lender funds the money in a lump sum in your bank account.
- Payback process. During the set repayment terms, you make monthly payments until you cover the borrowed amount plus interest.
How Can I Get Short-Term Loans Online?
To borrow short-term loans online, you must apply on the lender’s website and meet the eligibility criteria that may vary. However, the basic requirements include:
- Be 18 years old and above;
- Have a steady monthly income and a bank account;
- Prove your US citizenship or permanent residence;
- Provide a valid email address and phone number.
Pros & Cons of Short-Term Loans
- Perfect for emergency major expenses;
- Easy loan application process;
- Wide range of available loan amounts;
- Lower interest rates (if you choose the short-term repayment terms);
- Less time in debt.
- Higher monthly payments;
- Predatory lending practices.
Other Types of Short-Term Loans
Short-term loans come in all forms and shapes, and sometimes, it is hard to find out how to choose the most convenient one. Here are the common types of short-term loans that could help you cover your emergency expenses:
A payday loan is a short-term cash loan you borrow from a payday lender and repay on your next paycheck. The available loan amounts range from $100 to $1,000, repaid in a lump sum, not with fixed monthly installments as a personal loan.
Usually, a payday loan term varies between seven and 30 days and has no prepayment penalty. Also, payday loans may have high-interest charges, whose APR may reach 375%.
Payday lenders don’t have minimum credit score requirements or an origination fee to charge. Most of them don’t check your credit report through major credit bureaus. But you must prove your income with pay stubs to qualify for payday loans.
Credit Card Cash Advances
A credit card cash advance is also a short-term loan you get from your credit card. The available loan amounts depend on your credit limit. Most credit card issues have minimum credit score requirements that range from fair to excellent credit.
If you can’t meet them, consider federal credit unions that may offer you a 0% APR credit card. This credit union gives you a grace period with no interest, but after it expires, you must repay the loan with its costs included.
Merchant Cash Advances
Although this short-term loan is a cash advance, it functions like a loan. The lender lends the borrower the required loan amounts. The borrower pays the loan by granting the lender access to the borrower’s credit facility. The lender takes a share of the revenues from each purchase a borrower’s client makes until the loan is repaid.
Car Title Loans
These loans are also considered short-term loans that help you get money immediately. You can use your car to secure the loan and borrow money from the vehicle’s value. Its advantage is that you’re allowed to drive your car while you make the car title loan payments. These short-term secured loans are also good for bad credit borrowers, but they will carry higher interest rates.
Line of Credit
A line of credit (LOC) is a predetermined borrowing limit that may be used at any time. You may withdraw funds as needed until the limit is met. In the event of an open line of credit, money can be borrowed again as it is returned. It is a contract between a financial institution (often a bank) and you that specifies the maximum loan amount you may borrow. You can withdraw money from the LOC at any moment if you don’t exceed the agreement’s maximum amount (or credit limit).
How to Choose the Best Short-Term Personal Loan?
Shopping for the best short-term personal loan is challenging, but don’t worry. BadCredify provides you with several tips and tricks to find a convenient loan product for you:
- Find lenders that provide short-term loans. Not all loan providers offer cash loans with shorter repayment terms. Most want to lend more significant loan amounts to earn money on interest.
- Check the interest charges and other additional fees. The shorter repayment terms, the less interest you’ll pay over the loan repayment.
- Ask about the funding timeline. Every lender has its funding cut-off times; we suggest you find a lender that transfers the money within one business or even sooner.
- Verify the repayment method. Usually, most lenders have automatic payment options. They just withdraw the monthly loan payment from your checking account. It helps you avoid missing payments and late penalties.
BadCredify analyzed more than a dozen lenders to create this list, limiting them to those providing short-term personal loans with payback terms of 12 months or less. We then examined each lender’s interest rates, fees, application processes, and other factors.
We also analyzed many features within each main category, such as possible loan amounts, payback terms, APR ranges, and related costs. We also examined the lender’s minimum credit score criteria, whether it allows co-signers or joint applications, and its regional availability. Finally, we looked at each provider’s customer service tools, borrower benefits, and features that make the borrowing process easier, such as prequalification choices and mobile applications.
We assigned partial points where applicable based on how well a lender satisfied each requirement.
Frequently Asked Questions
Suppose the lender reports your monthly loan payments to the major credit reporting bureaus; it can improve your credit history. On the other hand, if you miss the payment, it can affect your credit score in the long term.
It depends on the loan type you get. Usually, the interest rate may vary from 7.99% to 35.99%. Plus, there can be additional charges, such as origination fees of up to $10.
It depends on the loan type you borrow. For example, the shortest term for a payday loan is two weeks, but for a personal loan, it is six months and above.