Best Short-Term Loans for Bad Credit

Short-term loans are typically for those with low credit scores. These loans typically have higher interest and/or fees. Consumers should always be on the lookout for predatory loans that have higher than usual APRs, high origination fees and unreasonable repayment terms. Find out more about how short-term loans work and which lenders provide the best options for consumers.

• Definition: A short-term loan is when a borrower who has a low credit score can get a lump sum of cash from a lender and is required to repay the amount within a few weeks to a year.

• Types: The most common types of loans are online personal loans, credit union loans, cash advances and payday alternative loans.

• Typical APRs: 18% to 36%

• Term: A few weeks to a year

• Loan amounts: $100 to $5,000

Key Takeaways

• Short-term loans help bad-credit borrowers access $100 to $5,000 fast, but you'll usually pay APRs from 18% to 36% — and sometimes much higher with lenders like OppLoans or Possible Finance. Repayment terms run from a few weeks up to a year.

• Your best options vary by need. PNC Bank and PenFed Credit Union offer the lowest APRs, OppLoans and Personify Financial skip credit score minimums and Possible Finance delivers instant funding for amounts up to $500.

• Before you apply, check your credit score, prequalify with multiple lenders to compare APRs and total costs and watch for origination fees, late fees and prepayment penalties. Avoid payday loans, title loans and any offer that seems too good to be true.

Summary generated by AI, verified by MoneyLion editors

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.

5 Best Lenders with Best Short-Term Loans for Bad Credit

1. OppLoans

OppLoans is a financial lending platform that partners with lenders in 40 states. OppLoans doesn't require a minimum credit score. Here are other features:

• Minimum credit score: No minimum

• Loan terms: Nine to 18 months

• Loan amount: $500 to $5,000

• Interest rate:160% to 195% annual percentage rate

• Fees: None

• Time to fund: As quickly as one business day

Pros

• No hard credit check

• Quick funding

• No origination, late or application fees

Cons

• Extremely high interest rate

• Not available in all states

• Loans are capped at $5,000

2. PNC Bank

PNC Bank has the longest application-processing time of any lender in this roundup, but it's one of the few traditional lenders that offers short-term loans — in this case, as short as six months. Here are additional features:

• Minimum credit score: Not disclosed

• Loan terms: 6 to 60 months

• Loan amount: $1,000 to $35,000

• Interest rate: 6.99% to 26.94% APR

• Fees: $0

• Time to fund: Immediately after signing documents in person

Pros

• No origination fees

• No fees

• Low APRs

Cons

• Hard pull on credit

• Not available in all states

3. Possible Finance

Possible Finance is an alternative to payday lenders. The difference is that you repay the loan in four biweekly installments instead of all at once from your next paycheck, and the interest rates aren't quite as high as payday lenders charge. In addition, Possible Finance charges no penalty or late fees. Here are the features:

• Minimum credit score: No minimum

• Loan terms: Eight weeks

• Loan amount: Up to $500

• Interest rate: Estimated 54.51% to 240.52% APR

• Fees: 10% to 25% of loan amount

• Time to fund: Instant funding in many cases

Pros

• No credit score requirement

• Reports to credit bureaus

• Instant fund disbursement

Cons

• Short repayment period

• Loans capped at $500

• High APRs

4. PenFed Credit Union

You'll have to join the credit union if you accept a PenFed loan, but it's an automatic process. PenFed opens a savings account pre-loaded with the $5 membership fee when you receive your loan. There's no origination fee, and you can apply with a co-borrower who has stronger credit to improve your chances of being approved. Take a look at these additional features:

• Loan terms: 12 to 60 months

• Loan amount: $600 to $50,000

• Interest rate: 6.09% to 17.99% APR

• Fees: None

• Time to fund: As soon as the next day

Pros

• Small and large loan options

• Low APR

• No origination fee

Cons

• Membership requirements

• Strict credit requirements

5. Personify Financial

Personify Financial offers unsecured personal loans to high-risk borrowers in a number of states throughout the U.S. Loan amounts and APRs vary by state. Here are additional features:

• Minimum credit score: None

• Loan terms: 12 to 48 months

• Loan amount: $500 to $15,000 in most states

• Interest rate: 36% to 179.50% APR

• Fees: 5% to 5.49% origination fee in most states

• Time to fund: As soon as one business day

Pros

• Reports to credit bureaus

• Generous repayment terms

Cons

• High origination fees

• High APRs

How To Choose the Best Short-Term Loan

Here's a step-by-step guide on how to choose the best short-term loan:

1. Check your credit score. You can pull your credit reports for free once a year from all three credit bureaus.

2. Compare APRs. You can prequalify at various lenders to compare APRs and terms.

3. Look at your total cost. Review your repayment costs for each lender.

4. Watch for fees. Check for origination fees, late fees, application fees and any prepayment penalties.

5. Choose the shortest term you can afford. Assess your budget and pick the shortest term that works with your entire financial picture.

Requirements To Apply for a Short-Term Loan

Before considering a loan, make sure you're aware of the requirements. Here's a checklist:

1. Know your credit score. Understanding whether you fall in the poor, fair, good or excellent score rating may help you decide where to apply. A poor credit score is between 300 to 579, while a fair credit score is between 580 to 669.

2. Understand your debt-to-income ratio. Most lenders are looking for a DTI that's less than 36%.

3. Have a steady income. Income requirements may vary from lender-to-lender, but you'll need to provide support that you have steady cash flow.

4. Provide proof of identity. You can provide a driver's license or passport.

5. Checking account. You'll likely need to provide 90 days of banking history.

6. Know the purpose of your loan. Some lenders will ask you why you're requesting the funds.

Before You Apply for a Loan

Do your research and shop around for the best option before you commit to a lender.

Be careful of getting trapped into high-interest loans that can't be paid off without taking out another loan. If you're experiencing a hardship or emergency try to only borrow exactly what you need and pay it back as soon as possible.

WhatTo Avoid with Short-Term Loans

Although a short-term loan may seem like a good choice, here’s what you should avoid:

• Payday loans: Payday loans can have high APRs. Some may be as high as 240% or more.

• Title loans: For a title loan, you’ll use your car as collateral. If you default, the lender can repossess your car.

• Hidden fees: Make sure you review all information. Check all fees and especially look for a prepayment penalty — you’ll be charged for paying off your contract early.

• Loan scams: Verify all lenders that offer too-good-to-be-true loans. These are likely scams.

Alternative Short-Term Loan for Bad Credit

If you happen to be a Cash App user and need just a small loan — up to $500, reportedly — you might qualify for Cash App Borrow. Find out if you're one of the select members eligible for Borrow by logging in to the app and selecting "Banking." You'll see a link to "Borrow" if you're eligible. If you are, you can borrow up to $500 for four weeks for a flat fee Cash App will disclose if you qualify for the loan. If you're not eligible, Cash App recommends the following steps:

• Use your Cash Card frequently.

• Add at least $200 per month to your Cash App account.

• Maintain a positive balance in your account.

Cash App notes that you'll be contacted when you become eligible.

👉 Best Personal Loans

Before You Apply for a Loan

Once your credit score dips below 600, you're more likely to have to pay more in fees and interest rates. You may also only qualify for loans from more predatory lenders. Do you research and shop around for the best option before you commit to a lender

Be careful of getting trapped into high-interest loans that can't be paid off without taking another loan. If you're experiencing a hardship or emergency try to only borrow exactly what you need and pay it back as soon as possible.

If you can't get terms you can afford, take some time to work on your credit score before you apply again.

FAQs

Can I get a short-term loan with a 500 credit score?

You can get a short-term loan with a 500 credit score, but you may have to pay a higher APR or have a co-signer to qualify for the loan.

What's the easiest loan to get with bad credit?

A payday loan is likely the easiest to get with bad credit. However, these loans have small loan limits and high APRs.

Are short-term loans expensive?

Yes, short-term loans can be expensive with high APRs and origination fees.

How fast can I get funded?

Many short-term loans can be funded the same day or the next business day.

Key Terms

• Annual percentage rate (APR): APR shows a loan's yearly cost, including interest and certain fees. It helps you compare offers more accurately than interest rate alone.

• Origination fee: An origination fee is a lender charge for processing and setting up your loan. It raises your total borrowing cost.

• Debt-to-income ratio (DTI): DTI compares your monthly debt payments to your gross monthly income. Lenders use it to judge whether you can handle a new loan payment.

• Short-term loan: A short-term loan gives you a lump sum and usually requires repayment within a few weeks to about one year.

• Predatory lending: Predatory lending uses unfair or deceptive loan terms that can trap people in costly debt they may struggle to repay.

Sources:

• Consumer Financial Protection Bureau: What is the difference between a loan interest rate and the APR?

• Consumer Financial Protection Bureau: What are mortgage origination services? What is an origination fee?

• Consumer Financial Protection Bureau: What is a debt-to-income ratio?

• Consumer Financial Protection Bureau: Payday, Vehicle Title, and Certain High-Cost Installment Loans

• National Association of Consumer Advocates: Predatory Lending

Summary generated by AI, verified by MoneyLion editors

Rudri Patel contributed to the reporting for this article.

Photo Credit: damircudic iStock.com