How To Find the Best Short-Term Loan Options

You have several options for short-term loans, and the best one for you depends on how fast you need cash, the total amount you'll pay and the repayment timeline that works for you. Depending on your situation, you might opt for a personal loan or a credit card with a 0% intro APR period.

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Key Takeaways

• Short-term loans usually run 12 months or less. The best short-term loan options include personal loans, cash advance apps, credit union PALs and 0% intro APR credit cards.

• The right choice comes down to three things. How fast you need cash, the total amount you'll pay and a repayment timeline that fits your budget.

• Personal loans typically charge 7% to 36% APR and fund in one to three business days — a strong fit when you need a larger amount and have good to excellent credit.

• Credit union PALs cap at 28% APR with an application fee of no more than $20, making them one of the lowest-cost options for members with fair credit.

• Cash advances start charging interest immediately with no grace period, plus a 3% to 5% fee — so pay them off as fast as you can.

• Payday and title loans can carry APRs near 400% or higher. These are the options to avoid whenever another route is available.

Summary generated by AI, verified by MoneyLion editors

Types of Short-Term Loans, Compared at a Glance

Short-term loans are taken for a limited period of time. While there's no universally accepted definition of a short-term loan, many lenders classify loans with terms of 12 months or less in this category. These loans typically require little or no collateral, so they’re unsecured loans. Two-week or 10-month loans can qualify as “short-term” loans.

 Here are the main types of short-term loans compared at a glance:

 How To Find the Best Short-Term Loan in 4 Steps

Try these steps to find the best short-term loan option for your situation.

1. Know How Fast You Need This Money

This will help narrow down your options. If you need money immediately, a credit card cash advance could be your best bet. You may be able to get a personal loan or payday alternative loan (PAL) the same day, but it often costs extra for an instant transfer.

2. Compare the Total Cost Across Options

Don't just look at fees and APRs — calculate the total amount you’ll pay and compare. For example, say you need to borrow $2,000 and you’re deciding between a six-month loan with an 11% APR and a credit card cash advance with a 30% APR. Assuming you would pay both options off after six months, the credit card cash advance would cost $100 more than the loan — and that’s not even factoring in a cash advance fee, which could be between 3% to 5%.

3. Check for Fees Before You Sign

Read all the terms and conditions before you commit to any option. Look for origination fees, prepayment penalties and late fees — these can all turn a decent interest rate into a bad deal.

4. Confirm the Payment Fits Your Budget

Missing a payment can damage your credit score for years, not to mention the stress it adds to your life. Make sure you know exactly how much you’re expected to pay — and when — to confirm it fits into your budget.

Once you've determined the type of loan that best suits your needs, take a look at this guide on how to apply for a short-term loan so you'll know what documents to have ready and how long each step in the process takes.

Red Flags That Signal a Bad Short-Term Loan

Some short-term loan options are deceptive. They look affordable, but the caveats and extra fees can add up quickly. Here are some signs that a specific short-term loan may not be a good deal:

• The rate is quoted as a flat fee. Payday loans typically use this format, such as advertising $15 for every $100 borrowed for two weeks. That might look reasonable, but that math can translate into an APR of 400% or higher. 

• Repayment is due in a single lump sum. A short-term loan that doesn’t offer the option to repay what you borrowed in installments may put additional strain on your budget, and increase the likelihood that you’ll fall behind on payments and damage your credit score in the process.

• The lender isn’t licensed with your state regulator or has unresolved complaints online. Be wary of any lender or company that doesn’t have proof of official accreditation in your state. Beyond that, check the brand’s reviews on the Better Business Bureau and Consumer Financial Protection Bureau websites. If there are negative reviews and many unresolved complaints, that could be reason enough to steer clear.

• The lender encourages you to borrow even more than you asked for. Borrowing money isn’t free, so it’s not a great sign if the lender pushes you to take out a larger loan than you originally planned. Not only will you pay more in interest and other potential fees, but this behavior could also encourage you to agree to something you can't actually afford.

• There's no prequalification option. If a lender doesn't show any of the red flags above and doesn't offer prequalification, it may not be the end of the world. But when you apply for a loan without prequalifying, the lender performs a hard credit check before you can see your rate. Each hard credit inquiry can drop your score slightly in the short term, so it’s best to keep these to a minimum.

When a Loan Isn't Your Best Option

If you need money quickly, options that fall outside of the true definition of loans can be worth a look. Here are a few examples and how they compare to more traditional short-term loans:

• Earned wage access products like MoneyLion Instacash^® let you access a portion of your paycheck ahead of payday. The upside is that you won't pay interest because it's not a loan, and you automatically repay the advance amounts on your next payday.

• Credit cards, especially those with a 0% intro APR offer, can be a strong alternative to personal loans. Some cards offer intro periods as long as 21 months, which could give you ample time to pay off your balance if you’re careful with your budget. The key is making sure you can pay off your balance by the time the introductory period ends.

• Borrowing money from a friend or family member could also be an option, but make sure both parties are clear about the repayment terms if you go this route. It’s a good idea to have the agreed-upon interest rate and payoff timeline in writing so there are no disagreements down the line.

FAQ

How fast can I actually get a short-term loan?

Depending on which option you choose, you could get a short-term loan in as little as a few minutes. The fastest options are usually credit card cash advances, though you may also be able to get a personal loan as soon as the same day — often with an extra fee for expedited funding.

Will applying for a short-term loan hurt my credit score?

Applying for a short-term loan could hurt your credit score, because many lenders require a hard credit inquiry as part of the approval process. This can drop your score by a few points in the short term.

Can I get a short-term loan to consolidate other debt?

Yes, and generally, personal loans are the better option to consolidate debt if you need a short-term loan. You can receive the funds relatively quickly — between one to three business days — and the APR may be be between 7% to 36%, which is a solid choice if you want to move multiple payments into one.

How much should I borrow for a short-term loan? 

You should only borrow as much as you need with a short-term loan. While you may qualify to borrow more than what you need, you’ll pay interest to do so, and it may add strain to your budget.

Can I get a short-term loan with no credit check?

There are some options for getting a short-term loan that don't require a credit check. Cash advance apps generally don't require credit checks,  and neither do payday loans. That said, both options can be extremely expensive — payday loans in particular are generally worth avoiding due to their extremely high APRs.

Key Terms

• Short-term loan: Financing repaid over a limited period, often 12 months or less, that usually requires little or no collateral.

• Annual percentage rate (APR): The yearly cost of borrowing, including interest and certain fees, shown as a percentage. It's the best single number for comparing loan costs across options.

• Payday alternative loan (PAL): A small-dollar loan from a federal credit union, regulated by the NCUA, with interest capped at 28% and an application fee of no more than $20.

• Cash advance: Cash borrowed against your credit card's limit. Interest starts accruing right away with no grace period, and issuers typically add a 3% to 5% fee.

• Earned wage access (EWA): A service that lets you tap a portion of the wages you've already earned before payday, usually repaid automatically from your next paycheck.

• 0% intro APR: A promotional period during which a credit card charges no interest on purchases or balance transfers. Once it ends, the card's standard APR applies to any remaining balance going forward.

• Origination fee: An upfront charge some lenders add to or deduct from your loan to cover processing, often a percentage of the amount borrowed.

• Hard credit inquiry: A lender's full review of your credit report when you apply, which can lower your score by a few points for a short time.

Sources

• NCUA. Permissible Loan Interest Rate Ceiling Extended (Letter 26-FCU-02)

• CFPB. How does a "no interest if paid in full" credit card offer work?

• CFPB. What is an APR, and why is it higher than the interest rate on my payday loan?

• CFPB. Data Spotlight: Credit card cash advance fees

Summary generated by AI, verified by MoneyLion editors

Alison Kimberly contributed to the reporting for this article.