Short-Term Loans: Types, Online Lenders and More
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A short-term loan can come with a repayment period of just a few years — or even less time. To help shop your loan options, below are five personal loans that offer a minimum repayment period of 24 or 36 months. Beyond that, you’ll find other types of short-term loans with generally shorter repayment periods.
5 short-term personal loans
|5 short-term loan options|
|APR*||Term length||Borrowing limit|
|LendingClub||10.68% – 35.89%||36 or 60 months||$1,000 – $40,000|
|LendingPoint||15.49% – 35.99%||24 to 48 months||$2,000 – $25,000|
|Marcus by Goldman Sachs®||6.99% – 19.99%||36 to 72 months||$3,500 – $40,000|
|OneMain Financial||18.00% – 35.99%||24 to 60 months||$1,500 – $20,000|
|Upgrade||6.94% – 35.97%||36 or 60 months||$1,000 – $35,000|
*May include an auto-debit discount
LendingClub is a peer-to-peer lending marketplace through which you could access a short-term installment loan, depending on your eligibility. After initial approval, investors who use the platform will decide whether to fund your loan request. The majority of loan applicants are approved within 24 hours and receive their requested loan amount in fewer than four days, according to the platform.
LendingClub does apply a one-time origination fee of 2.00% - 6.00% of the total loan amount, with the rate varying depending on the strength of your credit score; however, there are no fees for making additional payments or paying your loan off in full early. Borrowers located in the state of Iowa or U.S. territories will not be able to use LendingClub.
LendingPoint bills itself as a fair-credit personal loan lender, meaning they may approve customers with credit scores in or near the 600s. However, it’s mandated that you earn a minimum $35,000 in income annually. Holding the same job for at least 12 months and “positive recent credit behavior” will also help your application.
LendingPoint offers fast loans: You can be approved for and finalize your loan within a few hours, and receive funds as soon as the next day. Loans are available in the District of Columbia and all states, except for West Virginia, and depending on where you live, there may be an origination fee of 0.00% - 6.00% of the loan amount. There is no penalty for prepaying the loan back — a bonus since interest rates on its loans run high — though with much shorter repayment windows than many other personal loan lenders grant, it may not be feasible for many anyway.
3. Marcus by Goldman Sachs®
Marcus by Goldman Sachs offers a lot of unique perks to its borrowers that other personal loan lending companies do not. It doesn’t charge origination fees, late fees, prepayment fees or processing fees and allows borrowers to defer a monthly payment for one month after 12 consecutive on-time payments are made, without accruing additional interest or fees.
Approval for a loan could take less than 24 hours and the funds could be in your bank account within five days. To apply, you’ll need to be at least 18 years of age; however, if you live in Alabama, then you’ll need to be at least 19, while Mississippi and Puerto Rico residents need to be 21 or older.
4. OneMain Financial
Unlike other loan providers mentioned, OneMain Financial offers both unsecured and secured personal loan options. For good-credit borrowers, OneMain Financial may not be a competitive option for an unsecured loan: Its minimum APR is a high 18.00%. However, OneMain Financial’s secured loan could be a great alternative for bad-credit borrowers. With this type of loan, you’ll back your loan with collateral, such as a car — fail to repay your debt, though, and you risk the lender seizing your collateral. Because lenders view this type of loan as less risky, you may be able to access more competitive terms, if you don’t want or can’t obtain an unsecured loan.
With OneMain Financial, borrowers can sign their loan agreement and receive funds as soon as the next business day, but doing so will require an in-person visit to one of the company’s 1,500-plus branches to verify personal information. And because OneMain Financial only operates branches in 44 states and the District of Columbia, those residing in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island and Vermont will have to find another lender. The state you live in may also play a part in the loan amount you can borrow, and it will determine how large the loan origination fee will be and whether it will be a flat amount.
While Upgrade typically extends unsecured personal loans. Plus, like OneMain Financial, it also offers secured personal loans backed by a vehicle if an applicant is unlikely to qualify without collateral. It charges no prepayment fees if you wish to pay off the debt ahead of schedule, but all loans come with origination fees totaling between 2.90% - 8.00% of the total borrowed amount.
Approval for a loan can be obtained quickly and, once the agreements are finalized, the loan funds can be sent within a day; within four business days of approval, you should have the requested money sent directly to you.
Other types of short-term loans
|Alternative short-term loan options|
|What it is||Pros||Cons|
|Paycheck advance||Advance on your next paycheck from your employer or a financial app.||
|Credit card cash advance||Borrowing from your existing credit card account.||
|Pawnshop loan||A loan that relies on a valuable item as collateral.||
|Payday loan||Advance on your next paycheck from a lender.||
|Car title loan||A loan that relies on using your vehicle title as collateral.||
Think of a paycheck advance as borrowing from your future self. For this type of loan, your employer agrees to front you the needed money based on work you’ve already completed, which would normally be paid out in two weeks or a month’s time. This short-term loan won’t cost you any interest, typically, but it does depend on your employer being willing to do this.
If your employer doesn’t offer paycheck advances, there are other options like the Earnin app, which uses employment information you provide to offer payment on the day you worked. When you do get your paycheck, the amount prepaid to you is deducted from your account with no interest or fees charged.
However, this type of app will limit the amount you can borrow each pay period to small sums, at least in the beginning. Earnin, for example, limits you to $100 when you first start using it. You do have the opportunity to increase these short-term loan paycheck advances to $500 over time with good repayment behavior, such as paying back the service in a timely fashion.
Credit card cash advance
You can tap your existing credit card account for cash with an advance. This kind of short-term loan requires no credit check, as you’ve already been approved for the card and a certain maximum borrowing amount. Funds can be withdrawn from an ATM using your credit card or through a convenience check sent by the credit card company. How much you can access generally depends on your credit limit, though with some lenders, there may even be a separate cash credit limit, which could be a fraction of your actual credit limit.
Swiping your card for cash rather than typical purchases comes with added costs; you pay not only a fee for the privilege, but a separate higher interest rate as well. The upfront fee can be either a fixed cost or a percentage of the total cash advance.
The average credit card charges $9 or 4% of the loan, whichever is higher. This fee is added to the amount you wish to borrow, and that new total will then incur interest at a higher rate than what you pay for normal purchases. Expect an APR around 24% for a cash advance short-term loan and for interest to begin accruing immediately. (To explore low-interest credit cards, click here.)
High-value items, like jewelry or electronics, can be used as a way of securing a short-term loan from a pawnshop. Rather than sell your valuable personal item, you use it to back the loan; however, this means if you fail to repay on time, the shop becomes its new owner.
Because pawnshops will be looking to resell the item if you fail to repay, they won’t offer a loan matching its full value, but rather 25% to 60% of what it’s worth. You may need to offer up far more precious items than anticipated to secure enough cash, and likely won’t be walking away with a $1,000-plus loan.
For instance, the average pawnshop loan is only for $150, with repayment due in 30 days, according to the National Pawnbrokers Association. Most pawnshops won’t charge an interest rate per se, but rather different fees for the privilege of borrowing money that could be equal to APRs of more than 240%. A small silver lining is that this short-term loan has no credit check to qualify and, should you default, your credit score won’t be impacted.
Payday loans are short-term loans that act as a kind of advance on your future paycheck, and are easy to qualify for — most payday loan lenders simply require proof of income and a bank account, and this kind of short-term loan also doesn’t require a credit check. However, that ease of approval comes with hefty fees and tight repayment deadlines that can make paying off the debt tricky.
Short-term payday loans carry astronomical interest rates that can equate to more than 400% for a two-week loan, as lenders generally charge a flat fee of between $10 and $30 for every $100 borrowed, depending on the state you reside in and its laws. Additionally, lenders may charge late fees or tack on additional fees, and you could also have to pay a fee when accessing the loan funds through a prepaid debit card, for things like checking your balance or monthly service.
For all this, you’ll typically only be able to access small amounts of cash: $500 is a common limit (though the max short-term loan amount varies by state), and it must be repaid in a single payment, usually within two to four weeks.
Car title loan
Like with a pawnshop short-term loan, approval for a car title loan hinges on offering something valuable as collateral. In this case, it’s the title to a car, truck or motorcycle. Putting such a big asset on the line grants access to larger loan balances than any other short-term loan option; most will range from $100 to $5,500, but balances can reach as much as $10,000.
Because lenders can repossess the vehicle should you default, this kind of short-term loan typically doesn’t have a credit check or the strict approval requirements of a personal loan. However, you’ll risk losing it if you don’t make payments.
Title loans come with high fees that could total as much as 25% of the balance borrowed, equal to an APR of about 300%. Plus, the turnaround time for repaying your outstanding short-term loan is tight, typically 30 days or less.