How To Apply for a Short-Term Loan

To apply for a short-term loan, compare lenders by annual percentage rate (APR), fees, repayment term and funding speed. Choose a lender whose requirements fit your credit and income, gather your identification, proof of income and bank information, prequalify if available and submit the application. Approval and funding times vary, and no lender can guarantee approval or same-day funds.

Applying for a short-term loan isn't difficult, but the key is to keep costs as low as possible. 

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms and fees from different lenders and choose the best offer for you.

Short-Term Loan: At a Glance

• What is a short-term loan? A loan repaid over a relatively short period, but there is no single industry definition. Some lenders use 12 months or less, while others may use a longer term. Check the loan agreement for the exact repayment schedule.

• Loan amounts: Vary by lender and loan type. Borrow only what you need and can repay within the stated term.

• Funding speed: Same day to several business days, depending on the lender, verification process and bank transfer. Read how instant loans work, but remember that “instant” does not mean immediate or guaranteed.

• Best for: A one-time expense you can repay without putting essential bills or other debt payments at risk.

• Pros: A shorter repayment period can clear the balance sooner and may reduce total interest when the rate and amount are comparable.

• Cons: Short terms can create higher required payments, and some short-term products carry high APRs or fees that make repayment difficult.

How Do You Apply for a Short-Term Loan?

Follow these steps to apply for a short-term loan. Requirements, decision times and funding methods vary by lender, so confirm the details before submitting a formal application.

Typical timing depends on the lender and the completeness of your application. Online lenders may make decisions quickly, while banks and credit unions may take longer. Funding can arrive the same day or several business days after approval, but timing is not guaranteed.

1. Check your credit score so you know which lenders you qualify with.

2. Compare loans from banks, credit unions, online lenders and storefronts. Ask whether prequalification uses a soft credit check, and compare the APR, fees, repayment term, monthly payment and total repayment cost.

3. Gather your ID, proof of income and bank account details.

4. Fill out the lender's application online, in person or by phone.

5. Review the loan agreement, including the APR and fees.

6. Sign the agreement and wait for the funds to be deposited.

How Long Each Step Takes

Times are illustrative estimates and may vary depending on lender and personal circumstances.

If funding speed is your top priority, compare quick loans alongside the APR, fees and repayment timeline.

What Do You Need to Apply for a Short-Term Loan?

Requirements vary by lender, loan type and state. If your credit history limits your choices, compare the best short-term loans for bad credit and focus on APR, fees and a repayment plan you can manage.

You may need:

• Government-issued ID: A driver's license, state ID or passport

• Proof of income: Your two most recent pay stubs, or two months of bank statements showing direct deposit

• Proof of address: A utility bill, lease or mortgage statement from the last 60 days

• Bank account details: Your account and routing numbers for funding and repayment

• Social Security number: Needed for the credit check and identity verification

• Employer contact info: Name, phone number and how long you have worked there

Some lenders consider your credit history, income, debt-to-income (DTI) ratio, payment history and bank activity. Credit score and income thresholds aren't universal, and meeting a stated minimum doesn't guarantee approval. Check the lender’s eligibility requirements before applying.

Here’s what each lender type usually looks for.

Bank Short-Term Loans

• Credit score of 660 or higher

• Steady income with two years of employment history

• Debt-to-income ratio under 36%

• Existing checking account with the bank in many cases

Credit Union Short-Term Loans

• Credit score of 600 or higher

• Membership with the credit union

• Proof of steady income

• U.S. residency and a valid ID

Payday Loans

• Active checking account

• Proof of recurring income of at least $1,000 a month

• Government-issued ID

• Age 18 or older (21 in some states)

Online Short-Term Loans

• Credit score starting at 580 for most lenders

• Verifiable income through pay stubs or bank statements

• U.S. bank account for direct deposit

• Social Security number and a valid ID

Where You Can Apply for a Short-Term Loan

You have four main places to start your application.

• Bank branch or bank website: Best if you already have an account and a credit score of 660 or higher

• Credit union: A good fit for lower rates if you qualify for membership

• Online lender: Fast approval and funding, with options for fair and bad credit

• Storefront lender: In-person option for payday loans, title loans and installment loans

What Are the Types of Short-Term Loans?

1. Loans From Traditional Banks

• Typical cost: 6% to 24%

• Funding speed: Two to seven business days

• Loan amount range: $1,000 to $50,000

• Credit check type: Hard credit check

• One key risk: Borrowers with lower credit scores may be declined for a bank personal loan since credit restrictions are strict.

2. Payday Loans

• Typical cost: Almost 400%

• Funding speed: Same day or next business day

• Loan amount range: $100 to $1,000

• Credit check type: None

• One key risk: Payday loans can carry an APR of nearly 400%, based on Consumer Financial Protection Bureau data, which can trap borrowers in a cycle of debt.

3. Online Personal Loans

• Typical cost: 6% to 36% plus origination fees and late fees

• Funding speed: Same day to three business days

• Loan amount range: $1,000 to about $50,000

• Credit check type: Soft credit check to prequalify, hard credit check once you apply

• One key risk: If your credit score is low, you may have to pay higher APRs

4. Credit Union Payday Alternative Loans (PALS)

• Typical cost: Capped at 28% APR

• Funding speed: Same day or next business day

• Loan amount range: Up to $2,000

• Credit check type: Soft credit check

• One key risk: Short repayment period

Compare Short-Term Loan Options

For a broader comparison of short-term loan costs, speed and repayment timelines, review the best short-term loan options before applying.

Cash Advance Apps: An Alternative to Short-Term Loans

Cash advance apps let eligible users access a small amount of money before their next paycheck or deposit arrives. Instead of underwriting a loan, these apps typically review factors like direct deposits, income patterns and linked bank account activity to determine eligibility and advance limits. Available amounts are usually modest — often around $25 to $500, though some apps offer more for certain users.

Most cash advance apps don’t charge interest like credit cards or personal loans, but they may still carry costs such as subscription fees, voluntary tips or expedited transfer fees. Standard delivery can take one to five business days, while faster funding often costs extra. Repayment is usually automatic on your next payday or scheduled deposit, so plan for the withdrawal.

Popular cash advance apps include Dave, Brigit and EarnIn. Dave is known for smaller advances and a relatively low membership cost, though fees can add up once you factor in service and express-transfer charges. Brigit is often positioned as a budgeting app plus cash advance option, which may appeal to people who want alerts and financial tools alongside occasional advances. Other apps vary in what they offer, how quickly they fund and what they charge, so it’s worth comparing the total cost — not just the headline advance amount — before choosing one.

MoneyLion Instacash® is another option. Instacash isn’t a loan. It's an earned wage access product that lets eligible users access a portion of wages they have already earned before payday. 

Are There Any Benefits to Short-Term Loans?

Short-term loans offer several distinct benefits to cash-strapped consumers. 

You Can Get Fast Cash

Many lenders offer same- or next-day funding. So, you won't have to fill out mountains of paperwork only to sit around for days waiting for a loan officer to approve or deny your application. You can apply in minutes, receive an instant decision and get cash in your hands fast.

If you’re approved and accept the loan terms, you could have cash in your account by the close of business or the next business day. 

Less Interest Paid — Sometimes

A shorter term can reduce total interest compared with a longer loan at the same rate and amount, but it usually creates a higher monthly payment. Compare total repayment cost and make sure the payment fits your budget.

Loans with lengthy repayment periods may seem like a better deal, mainly if the monthly payment is low. However, an extended loan term also gives the lender more time to collect interest from you. With a short-term loan, the repayment period won’t span beyond one year, so you pay less interest if you make larger payments. 

However, some short-term lenders can still take advantage of consumers with less-than-perfect credit who may not have considered the cost of their loans. One way to avoid exorbitant short-term rates is to know your rights as a consumer. You can explore options such as a credit union or an online loan with competitive interest rates.

Always ask the lender before signing to confirm you can pay off the loan early without incurring prepayment penalties. 

It's Easily Accessible

Some lenders consider applicants with lower credit scores or limited credit histories, but approval is not guaranteed. Lenders may also consider income, debts, payment history and bank activity, and the cost may be higher for borrowers with more credit risk.

Some short-term loans don't require a traditional credit check, but that doesn't make them low-cost or low-risk. Payday loans, title loans and other high-cost products can create serious repayment problems, so compare safer alternatives and the full APR before applying.

Key Terms

• Short-term loan: A loan repaid over a relatively short period, although the exact definition and term vary by lender and product.

• Annual percentage rate (APR): The yearly cost of borrowing, including interest and certain fees, expressed as a percentage.

• Payday loan: A small-dollar, high-cost loan usually due in one payment on or near the borrower’s next payday.

• Payday alternative loan (PAL): A small-dollar loan offered by a federal credit union under PAL program rules, including limits on rates, fees and terms.

• Soft credit inquiry: A credit-file review that does not affect your credit score, often used for prequalification.

• Hard credit inquiry: A credit check connected to a formal application that may temporarily affect your credit score.

• Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income, expressed as a percentage.

• Earned wage access (EWA): A non-loan service that may let eligible users access wages they have already earned before payday.

Sources

• Consumer Financial Protection Bureau: What is a payday loan?

• Consumer Financial Protection Bureau: What is an annual percentage rate (APR) and why is it higher than the interest rate for my payday loan?

• Consumer Financial Protection Bureau: What is a credit inquiry?

• National Credit Union Administration: Can credit unions offer payday alternative loans to members?

• Federal Trade Commission: What To Know About Advance-Fee Loans

Parts of this article were created with AI assistance. MoneyLion editors reviewed, fact-checked and edited the final version and are responsible for its accuracy.

Melanie Grafil, CFHC™, contributed to editing this article.

Grace Kilander contributed to the reporting for this article.

Photo credit: ozgurcankaya / iStock.com