Need Money Now? Check Out These Best Short Term Loan Companies
11 MIN READ
Published July 28, 2023 | Updated December 13, 2023
Short-term loan companies offer loans for emergencies with shorter repayment terms of 12 to 36 months, allowing you to pay off the loan faster. You’ll want to prequalify and compare the interest rates, fees, and repayment terms.
Whether you need cash to deal with a car repair or a medical emergency, short-term loan companies can provide access to funds when you need them the most. While the interest rates can sometimes be higher, they’re still lower than most payday loans.
What are Short-Term Loan Companies?
Short-term loan companies are financial institutions that offer loans with shorter repayment periods, typically 12 to 36 months. This is an unsecured debt, so you won’t need collateral to borrow money. When evaluating your loan application, lenders will review your income, credit score, and other details.
Compared to most personal loans with a longer repayment period, these loans offer smaller amounts. You can use the funds for anything, such as medical bills, car repairs, and debt consolidation.
How Short-Term Loans Work
Short-term loans allow you to borrow a lump sum amount that you can pay back over a predetermined period of time. You’ll pay an installment each month, which will include a principal component and interest charges. With a shorter term, your monthly payment will typically be higher, but you’ll likely pay less interest over the life of the loan.
If you can afford the higher monthly payments, you may be able to save a considerable amount of money in interest charges and get out of debt faster. Many lenders don’t charge prepayment penalties, so it may be possible for you to pay off the loan even faster if you have the means.
Most lenders will allow you to prequalify online by filling out a short form so you can compare loan offers. Once you submit a formal loan application and are approved, funds are typically dispersed within one or two business days.
Best Short-Term Loan Companies
Short-term loans are offered by traditional banks, credit unions, and online lenders. Be sure to compare loan offers for your specific credit profile and individual needs to ensure you get the most competitive rate.
What is the Best Short-Term Loan Company?
"Short-term loans are a great option for someone that has the ability pay it back in the short amount of time given or even sooner,” shares Teresa Dodson, debt relief expert and founder of Greenbacks Consulting. “Be mindful of the interest rate,” Dodson cautions. “In my opinion, I would walk away from anything over 20%."
The best short-term loan company is one that offers you the lowest interest rates, convenient repayment terms, has good customer reviews, and is transparent about their fees. We reviewed 12 lenders to provide you with a list of the three best short-term loan companies.
|Minimum Credit Score
LendingPoint offers short-term loans in 48 states with a minimum loan amount of $2,000. Borrowers can apply online and get quick funding once approved. Depending on the state you reside in, origination fees can be anywhere from 0%-6%. The higher your credit score, the better your chance of getting a lower APR.
Wells Fargo offers you more options if you want a longer repayment term or a larger loan amount. The interest rates are lower compared to many lenders, and if you qualify, you can get a 0.25% relationship discount. If you are a current customer, you’ll be able to apply online.
If you have bad credit, Oportun can be a good choice for short-term loans. The company allows you to borrow as little as $300 and offers a very short repayment term of six months. This can be a good alternative for those seeking a payday loan since the maximum APR is 35.95%, which is much lower than title loans or payday loans.
Companies That Offer Short-Term High-Interest Loans
One of the main things you should look out for when borrowing a short-term loan is high-interest rates. Depending on your creditworthiness, you may have to pay interest rates as high as 35.99%. In comparison, the average interest rate on credit cards is 20.82% currently.
With personal loans, you’ll have structured monthly payments, so it may be a good choice for many. Regardless of your credit report, be sure to compare the rates you qualify for with multiple lenders to ensure you’re getting the lowest possible interest rates.
Choosing a Short-Term Loan Company
With so many short-term loan companies out there, choosing one that fits your needs and offers you the best deals can be a challenge. Fortunately, most lenders allow you to prequalify online, so it can be easier for you to make the right choice. Some factors to keep in mind when weighing your options are the interest rates, repayment terms, fees, minimum credit score requirements, and customer reviews.
Eligibility Criteria for Short-Term Loans
Before you apply for a short-term loan, check the eligibility requirements of the lender. In most cases, lenders will look at your credit score, employment stability, income, debt-to-income ratio, and other details to determine if you’re eligible. Here are a few documents you’ll be required to submit with your loan application:
- Banking information
- Identification proof
- Proof of residence
- Proof of employment
- Pay stubs and tax returns
Interest Rates and Fees Associated with Short-Term Loans
Compare the interest rates and fees charged by different short-term loan companies. Interest rates can vary from 7.49% to 35.99%. The rate you qualify for will depend on your credit score and other factors. Lenders may also charge various fees, such as origination fees, late payment fees, and prepayment penalties. Some lenders may not charge any fees.
Risks and Benefits of Taking a Short-Term Loan
Before you borrow a short-term loan, it’s worth considering the risks and benefits. There are some benefits of this type of loan, along with a few downsides that you should carefully think about.
- You may qualify for better interest rates compared to longer repayment periods, especially if you have good credit.
- You’ll typically pay less in interest charges over the life of the loan due to the shorter repayment term.
- You’ll be able to get out of debt faster.
- The loan amounts are usually lower.
- The monthly payments are higher because of the shorter term.
- If you find the monthly installments challenging to keep up with, you may not be able to extend the repayment term later.
Short-Term Loans to Avoid
Other than personal loans, several other types of short-term loans are available. But not all of them are good options. Payday loans, for example, will provide you quick cash even with bad credit, but they’re very expensive. Typically, the APR on payday loans is 400%, which is much higher than any other type of loan. If you’re unable to repay the loan by your next paycheck, you can get trapped in a cycle of debt.
Title loans will allow you to borrow money in exchange for the title of your car. These loans also have higher interest rates, and if you default, your car can be repossessed. Similarly, pawn shop loans require you to provide collateral, and with the expensive borrowing costs, it’s best to avoid these loans.
Legal Regulations and Consumer Protection Laws
Regardless of the type of loan you plan to borrow and the lender you choose, it is recommended that you learn more about consumer protection laws and legal regulations that are in place to safeguard your rights as a borrower.
Legal Regulations and Consumer Protection Laws Related to Short-Term Loans
One of the most important regulations you need to be aware of is the Consumer Credit Protection Act (CCPA) is legislation that is designed to protect borrowers from credit card companies, lenders, and banks. The act requires lenders to follow disclosure requirements. This means that your lender must disclose the total cost of the loan, including fees, and how interest is calculated on the loan.
The Fair Debt Collection Practices Act is a law that controls the actions of debt collectors when trying to collect debts from borrowers. For example, debt collectors can only call during certain times of the day and only a predetermined number of times a day. A debt collector cannot use unfair means to collect any debt.
Repayment Options and Schedules
One of the biggest advantages of opting for a short-term loan is the ability to pay off the loan sooner when compared to personal loans with longer repayment terms. Before you apply for a loan, familiarize yourself with the repayment options and schedules offered by the lender and the monthly installments to ensure you can afford the payments.
Loan Repayment Options and Schedules
Short-term loans typically range from 12 to 60 months, though you may be able to find lenders that offer even shorter terms of six months. Payments can be monthly, semi-monthly, bi-weekly, or weekly. Each installment consists of a portion of the principal and a portion of the interest. During the first few payments, the portion of interest is higher in the installment. A shorter repayment term will have a higher installment amount, while a longer term will mean your installments will be lower.
Online Applications and Approval Processes
Most lenders today offer an online application process, fast funding, and approvals for convenience. The application and approval process is quite straightforward, quick, and easy to follow. It is recommended that you prepare the required documents in advance to speed up the process.
Online Applications and Approval Processes for Short-Term Loans
When applying for a short-term loan online, follow these four easy steps:
- Start by checking your credit report to see your current score. If there are any errors, ensure you correct them before applying for a loan.
- Review your budget to see how much you can afford to pay each month as a loan installment. This will allow you to determine how much you can borrow.
- Prequalify for personal loans from a few different lenders. This will allow you to preview and compare loan amounts, repayment terms, and interest rates. This won’t affect your credit score.
- Once you finalize a lender, gather the necessary documents such as ID proof, proof of residence, pay stubs, and W-2s. Fill out the application form online, upload your documents, and submit.
The lender will conduct a credit check and will review your application. Loan approvals usually take a day or two, and the loan funds will be transferred to your bank account usually the next business day. You can then set up a direct deposit to make sure you pay the installments before the due date.
5 Tips for Getting a Short-Term Loan
Here are five tips to follow to improve your chances of getting approved and to ensure that you’re picking the right short-term personal loan for your needs:
- Take your time to compare loan options. Consider loan amounts, annual percentage rates, fees, and term lengths.
- Pre-qualify first to improve your chances of getting approved.
- If you feel that the rates you’re qualifying for are not competitive, consider alternatives such as using your credit card, cash advance, or borrowing from a family member.
- Avoid payday loans, auto title loans, pawn shop loans, and other predatory lenders.
- Have a plan in place to pay off your debt quickly.
Short-Term Loan Companies Near You
There are several large financial institutions and online loan lenders that offer loans to borrowers from around the country. But if you’re looking for short-term loan companies with a physical location near you, it’s quite easy to find them.
Finding Short-Term Loan Companies Close to You
To find a lender near me, simply search “short-term loan companies near me” with your location turned on. You’ll receive information with lender names, addresses, and phone numbers. Another option is to ask friends and family for referrals if they’ve used a lender in the past. Most lenders will also have a list of their locations on their website so you can check to see if they have a branch close to you.
Short-term loans can be a lifeline in an emergency as long as you’re fully aware of the costs involved. Be sure to check your budget in advance to see if you’ll be able to comfortably pay the installments each month. If you miss payments, you’ll be charged a late fee, and your credit score might take a hit. If you are finding it difficult to make payments due to other debts, get in touch with TurboDebt. Take benefit of our free consultation to see how we can help you find the right debt relief option for your individual needs.