Best Short Term Loans: Compare Your Options

Short-term loans can provide quick funding for people who want to cover sudden expenses or who may not qualify for a traditional loan. (iStock)

You can use a short term loan for almost anything. Short term loans are commonly used by small business owners or individuals who may not qualify for a traditional loan. People who want to save money on interest rates, such as when buying a car, can opt for a short term loan.

The biggest difference between a short term loan and a traditional loan is the repayment term. Short term loans have a shorter repayment window, usually between 3 and 18 months, while long term loans have a repayment period of 24 months or more.

Generally, people with a higher credit score are more likely to qualify for long term loans. Short-term loans are generally cheaper (less time to repay interest) and have lower limits. If you are looking for quick cash and this sounds like the loan option for you, read on.

Potential options for short-term loans

If you’re in need of quick cash, there are some great short-term loan options that you can consider, including:

  1. Open a credit card
  2. Get a loan online
  3. Visit your local bank or credit union
  4. Asking for help from friends or family
  5. Borrow against your life insurance or retirement contract

1. Open a credit card: While most people don’t think of credit cards as loans, technically you quickly borrow money from the credit card lender every time you make a purchase. You may also find it easier to open a new line of credit than to qualify for a personal loan. If you are able to pay off your credit card debt quickly, you can avoid high interest rates.

If you have bad credit and are in a bind, you may want to consider opening a balance transfer credit card with 0% APR (just make sure you pay off the balance completely before the expiration date. launch period). Use Credible’s free online tools to compare currently available credit cards and find a balance transfer option that meets your criteria without affecting your credit score.


2. Get a loan online: There are hundreds of online lenders willing to offer short term loans. While many companies offer fair interest rates and reasonable fees, there are also many that charge rates much higher than the industry average.

Browse through the different types of loans and terms that meet your criteria. Credible can show you personal loan rates from 4.99% APR in just two minutes without affecting your credit score. You just need to enter the amount of your personal loan you want in their free comparator.


The personal loan application process should be quick and easy (especially if you have an excellent credit rating). In fact, with some online lenders, you can get a response within one business day.

Loan amounts, rates, terms, and fees can vary by lender, so be sure to do your homework before committing to an online lender. Use Credible’s personal loan calculator to see your estimated monthly payments. You can also visit Credible’s personal loan center to learn more about the application process, loan rates and beyond.

Before working with an online lender, be sure to read the fine print on their interest rates and repayment terms. It would help if you were also researching customer experiences, so you get a feel for how a business treats its customers.

A few red flags to look for: poor website security, prepayment penalties, interest rates (some online lenders and quick loans charge interest rates of 300% or more) and default minimum requirements. Most short term lenders who have very lax requirements will likely charge a lot of money for their services.

3. Visit your local credit union or bank: One of the easiest options is to visit your local credit union or bank to apply for a short-term loan. Try to make an appointment with an in-person credit counselor and be sure to bring pay stubs and tax slips. If you are earning income from a side business, make sure you have the information with you as well. Credit unions are often easier to work with if you are already a long-term customer.

Your credit union or bank will likely have the best interest rates available, as many offer special promotions to their customers. Make it one of the first places to look if you need a short term loan. Just note that most banks will have a minimum credit score requirement (if you want to improve your credit score, follow these simple steps).

Note: Another option would be to take advantage of overdraft protection. Many credit unions and banks only charge an overdraft fee for each transaction that makes you pay your balance. If you can pay off the amount you discovered in a few days or a week, it can be an inexpensive option. Keep in mind that you don’t find yourself in a repeated cycle of overdrafting and paying off your account as this can be very costly in the long run.


4. Ask friends or family for help.: If you have the opportunity, applying for a short-term loan from family or friends is often the most cost-effective solution. However, bringing money into any relationship can make it difficult, especially if you are unable to make payments or your lender friend is reluctant to ask for payments.

5. Borrow against your life insurance or retirement: An alternative to traditional loan options is to borrow against your life insurance policy or pension fund. This option is last on the list for a reason. In most cases, borrowing from either option is never a good idea. If you borrow money from your retirement accounts, you will have to pay taxes on the amount you take and an early withdrawal penalty. Worse yet, you will lose any winnings you could have earned if you had left the money in your 401 (k) or IRA.

If you are borrowing from a whole life insurance policy, you will have to repay the borrowed amount with interest. If you do not repay the loan, the insurance company will deduct the amount owed from the payment when the policy is due.


How to choose a short term loan

No matter where you choose to get your loan, be sure to compare offers to make sure you get the best deal. Before applying for a loan, consider the following factors:

  • How much can you afford to borrow?
  • Interest rate
  • Loan origination fees
  • Monthly payment
  • Repayment Terms
  • The reputation of the short-term lender

Short-term loans can be a great way to cover yourself in an emergency, but you’ll get the most benefit if you can pay off the loan quickly and avoid predatory short-term lenders.

Remember: a bank, credit union, or online lender can help you get a short-term loan, and if you have a good credit rating, you may find it easier to qualify. Use Credible to guide you through the online loan application process and find out what loan rates are currently available.

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