How To Apply for a Short-Term Loan

To apply for a short-term loan, pick a lender that fits your credit profile — such as a bank, credit union, online lender or storefront — then submit an application with your ID, proof of income and bank details. Most lenders give a decision within minutes to a few business days, and approved funds can hit your account the same day or by the next business day.

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

MoneyLion

What can be the catch with debt settlement?

You might owe taxes on the forgiven amountYour monthly payment could go up temporarilyLenders may raise your credit limit afterSettlement always clears your credit report

5

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.

Key Takeaways

• How to apply for a short-term loan starts with matching a lender to your credit: Choose a bank, credit union, online lender or storefront, then submit your ID, proof of income and bank details.

• Decisions and funding are fast: Many online lenders decide in minutes and fund the same or next business day, while banks and credit unions can take one to three business days.

• Amounts are small and terms are short: Most short-term loans run $100 to about $5,000, repaid within a year.

• Cost varies wildly by lender type: Bank and credit union loans run 6% to 24%, online loans 6% to 36%, while payday loans can approach 400% APR.

• A credit union PAL is the low-cost pick: Payday alternative loans cap APRs at 28% and require credit union membership.

• Prequalify to protect your credit: A soft pull previews your rate, while the full application triggers a hard inquiry.

Summary generated by AI, verified by MoneyLion editors

Short-Term Loan: At-a-Glance

• What is a short-term loan: With a short-term loan, you can get a lump sum of cash as long as you repay it within months or less than a year.

• Loan amounts: $100 to $50,000, depending on loan type

• Funding speed: Often instant

• Best for: Small unexpected expenses like medical bills or auto repairs

• Pros: Quick approvals, fast cash for those with poor credit, debt is quickly cleared because of short repayment terms

• Cons: Annual percentage rates (APRs) can be exceedingly high, frequent payments can cause debt strain and you can be stuck in a debt trap

How Do You Apply for a Short-Term Loan?

Follow these steps to apply for a short-term loan.

• Check your credit score so you know which lenders you qualify with

• Compare offers from banks, credit unions, online lenders and storefronts

• Gather your ID, proof of income and bank account details

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

• Review the loan agreement, including the APR and fees

• Sign the agreement and wait for the funds to be deposited

How Long Each Step Takes

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

Have these documents ready before you start your application.

• 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

Loan requirements change based on where you borrow. Here is 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 (DTI) ratio under 40%

• 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 data from the Consumer Financial Protection Bureau, which is why they often 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

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 it’s important to 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 still add up once service and express-transfer charges are factored in. 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

Loans with lengthy repayment periods may seem like a better deal, mainly if the monthly payment is low. However, an extended loan term also means that the lender has 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 online loan with competitive interest rates.

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

It's Easily Accessible

If you're at least 18 years of age with a steady source of income, you shouldn’t have trouble finding a short-term loan. The lower your credit score, though, the more you’ll pay in interest if the lender uses your credit rating to determine the loan terms. 

Several lenders offer no-credit-check short-term loans. They often have a high interest rate since the lender is assuming more risk. The good news is that they’re unsecured and are far more appealing than secured loans that require collateral. This means you won’t lose your home, car or other valuable possession if you’re unable to repay the loan.

Short-Term Loan FAQs

How long does short-term loan approval take?

Many online lenders make a decision within minutes, while banks and credit unions can take one to three business days. Funding usually lands in your account the same day or the next business day after approval.

Can you qualify for a short-term loan with bad credit?

Yes, some online, payday and storefront lenders approve borrowers with credit scores below 580. Rates will be higher, so compare the APR and fees before you sign.

What credit score do lenders look for?

Bank and credit union short-term loans usually want a score of 660 or higher. Online lenders often approve scores as low as 580, and payday lenders may not run a traditional credit check at all.

How much can you borrow with a short-term loan?

Short-term loan amounts usually range from $100 to $50,000, depending on the lender and your income. Payday loan limits are often capped by state law.

Does applying for a short-term loan hurt your credit?

A preapproval uses a soft pull that does not affect your score. A full application triggers a hard inquiry, which can lower your score by a few points for a short time.

Key Terms

• Short-term loan: A lump-sum loan repaid within months to under a year, often for a small, urgent expense.

• Annual percentage rate (APR): The yearly cost of borrowing including interest and fees — the clearest way to compare offers.

• Payday loan: A short-term, high-cost loan that can approach 400% APR, best avoided as a last resort.

• Payday alternative loan (PAL): A credit union small-dollar loan capped at 28% APR.

• Origination fee: A one-time charge some lenders deduct from your loan proceeds.

• Soft vs. hard credit inquiry: A soft check (prequalification) doesn't affect your score; a hard inquiry can dip it a few points.

• Debt-to-income ratio (DTI): The share of monthly income going to debt; banks often want it under 360%.

• Cash advance app: A non-loan tool that advances a small amount against your next paycheck, with no hard credit check.

Sources

• CFPB: What is a payday loan? 

• NCUA: Payday Alternative Loans

• CFPB: What's the difference between a hard and soft credit inquiry? 

• Federal Reserve: Consumer Credit (G.19) 

Summary generated by AI, verified by MoneyLion editors

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

Grace Kilander contributed to the reporting for this article.

Photo credit: ozgurcankaya / iStock.com