When you’re facing a financial emergency and have bad credit, finding the right loan can feel like a challenge. Payday loans and credit cards might seem tempting, but they often come with high fees and a cycle of debt.
Thankfully, short-term loans can offer a more manageable solution, with flexible repayment terms and multiple lenders to choose from. Here’s a look at some top options for securing a short-term loan, even with bad credit.
Best Short-Term Cash Advance Loans
Short-term cash advance loans provide quick access to small amounts of cash, typically with higher interest rates, especially for those with bad credit. To qualify, you’ll usually need a steady income and a checking account.
While many of these loans have repayment periods of a few weeks, the lenders below offer more flexible terms, giving you several months to repay. This extra time can help make payments more manageable.
MoneyMutual
Features & Benefits
- Application takes less than 5 minutes
- Get a decision on your loan within minutes
- Funds are available within 24 hours
- Trusted by more than 2,000,000 borrowers
MoneyMutual is an online marketplace of lenders. They make it quick and easy to find a short-term cash advance loan in as little as 24 hours.
One application can potentially get you multiple loan offers. MoneyMutual has been trusted by more than two million customers. They serve borrowers with bad credit from all 50 states except New York and Connecticut.
BadCreditLoans.com
Features & Benefits
- No cost to check loan approval
- High approval rate despite credit history
- Funds available as soon as next business day
- Assisting people with bad credit since 1998
Bad Credit Loans is an online lender marketplace that allows you to connect with multiple lenders by filling out a single application. The service is 100% free.
Once you’re approved, your lender will provide you with the APR, loan fees, and other terms.
Read through the terms, compare all the offers you’ve received, and only accept the loan you’re most comfortable with. You are not obligated to accept the personal loan from any lenders that you are matched with.
Not all short-term lenders require a lump sum payment. Before choosing a loan, be realistic about whether you can afford the repayments. If spreading out payments over a few months suits your situation better, look for that option.
It’s also important to consider all costs, including whether interest is charged monthly or as a one-time fee. Make sure to compare the total loan cost, including any origination or late fees, so there are no surprises later on. Understanding the full picture can help you avoid additional financial stress.
Best Short Term Installment Loans
If you need a loan with longer repayment terms, a short-term installment loan is worth considering. These loans allow you to borrow more and spread payments over months or even years, making them more manageable than cash advances.
A key advantage is that many installment lenders report to credit bureaus, helping you rebuild your credit if payments are made on time. Just be sure to account for the total loan cost over time, as longer terms can lead to higher interest payments. Here are our top picks for lenders offering installment loans with flexible terms.
CashUSA
Features & Benefits
- Flexible borrower requirements
- Loan request can be approved within minutes
- Money deposited as early as 1 business day
- All credit types accepted
CashUSA connects borrowers with lenders. Each application is sent to the lender most likely to lend to the borrower. This platform caters to a diverse range of credit profiles, making it more than just a broker for those with poor credit.
Interest rates vary depending on the lender, so make sure you read through the terms for each emergency loan before you choose. Applying online only takes a few minutes, and funds are often available the next day.
PersonalLoans.com
Features & Benefits
- Multiple loan types available
- Fast loan decision
- Funds deposited as soon as you accept an offer
- Nationwide availability
PersonalLoans.com offers access to multiple loan types through a network of lenders, catering to individuals with credit scores as low as 600. Each lender provides unique rates, allowing you to choose the best offer for your needs.
The online application process is quick and easy, taking just minutes to complete. You’ll receive a decision within one business day, and approved funds can be deposited shortly after you accept an offer.
Comparing Short-Term Loan Types: Cash Advance vs. Installment Loan
When it comes to short-term loans, two common options are cash advance loans and installment loans. Both can help you cover immediate expenses, but they work very differently. Understanding the differences can help you pick the loan that best fits your financial situation.
Cash Advance Loans
Cash advance loans are typically smaller, short-term loans meant to be repaid within a few weeks, often by your next payday. They’re quick and easy to obtain, with many lenders offering same-day or next-day funding. However, they often come with very high interest rates and fees, sometimes reaching triple-digit APRs.
Because they need to be repaid in one lump sum, cash advances can be tough to manage if you’re already dealing with limited funds. If you can’t repay the loan in full, you might find yourself rolling it over into a new loan, which can lead to a cycle of debt.
Best For: Cash advance loans may be suitable for those who need a small amount of money fast and are confident they can repay it quickly, typically within a few weeks. However, they should be used sparingly due to the high costs involved.
Installment Loans
Installment loans, on the other hand, offer more flexibility. Instead of repaying the loan in one lump sum, you make regular monthly payments over a set period of time, which can range from a few months to a few years. This makes it easier to manage, especially if you need a larger amount of money or more time to repay.
Interest rates for installment loans vary, but they tend to be lower than those for cash advances. Additionally, many installment loans report to credit bureaus, which means making timely payments can help improve your credit score over time.
Best For: Installment loans are a better fit for those who need more time to repay the loan or want to borrow a larger amount. They offer lower interest rates and a structured repayment plan, making them easier to manage over time.
Which Loan is Right for You?
If you’re in a pinch and need a small amount of cash quickly, a cash advance might seem like the fastest solution, but the high costs can add up. On the other hand, if you’re looking for a more manageable way to borrow, with lower rates and predictable payments, an installment loan is likely the better option. Always weigh the total costs and repayment terms before deciding which loan type suits your needs.
How to Qualify for a Short-Term Loan with Bad Credit
Qualifying for a short-term loan with bad credit can feel tricky, but it’s definitely possible. By preparing a few key details ahead of time, you can boost your chances of approval. Here’s how you can improve your odds and streamline the process.
Check Your Credit Report
Before you apply, take a moment to check your credit report. This helps you understand where you stand and spot any errors that could be hurting your score. You’re entitled to a free credit report from the major bureaus once a year, so it’s worth reviewing it to catch any inaccuracies that can be disputed.
Verify Your Income
Lenders want to see that you have a reliable source of income. Whether it’s from a job, government benefits, or other means, you’ll need to prove you can handle loan repayments. Gather recent pay stubs, tax returns, or benefits statements to show consistent income. The more transparent you are, the better your chances of approval.
Choose Lenders That Work with Bad Credit Borrowers
Not all lenders are the same. Some specialize in helping people with bad credit, so it’s smart to apply with those that cater to your situation. Look for lenders that promote their willingness to work with borrowers with low credit scores. Many online platforms will connect you with lenders who are more flexible.
Have a Checking Account Ready
Most lenders require you to have a checking account to qualify for a loan. This is where they’ll deposit the funds and, often, where they’ll collect repayments. Make sure your account is active and in good standing before applying. This simple step can prevent any delays in the approval process.
Be Honest About Your Situation
When filling out loan applications, be honest about your financial situation. Lenders will verify the details, so giving accurate information upfront prevents complications later. This can include your income, existing debts, and living expenses. Transparency improves your chances and builds trust with lenders.
See also: Top 5 Emergency Loans for Bad Credit of 2020
What to Expect in Terms of Rates and Fees
When it comes to short-term loans for bad credit, interest rates and fees are typically higher than those for borrowers with good credit. However, knowing what to expect can help you avoid unpleasant surprises. Here’s what you should look out for:
Higher Interest Rates
If you have bad credit, it’s common to see annual percentage rates (APR) between 20% and 36%, though some can go higher depending on the lender and loan terms. Lenders see bad credit borrowers as riskier, so they charge more to offset that risk. While you might find some lenders offering lower rates, especially through online platforms, it’s wise to prepare for the higher end of the APR range.
Origination Fees
Some lenders charge origination fees, which cover the cost of processing your loan. These fees are usually a percentage of the loan amount, typically ranging from 1% to 5%. For example, if you’re borrowing $2,000 with a 3% origination fee, $60 will be deducted from your loan amount, leaving you with $1,940. Always factor this in when determining how much you need to borrow.
Late Fees and Prepayment Penalties
Many lenders impose late fees if you miss a payment, and those can add up quickly. It’s also worth checking if there are prepayment penalties—fees charged for paying off your loan early. While not all lenders have this, it’s something to look out for, especially if you plan on paying off the loan ahead of schedule.
Total Loan Cost
Before accepting a loan, it’s essential to look beyond the monthly payment and consider the total cost of the loan over time. This includes interest, fees, and any additional charges that could be added if payments are missed. Comparing loan offers side by side can help you make a decision that won’t cost you more in the long run.
Avoiding Predatory Lenders: Red Flags to Watch Out For
When you have bad credit, it’s easy to fall into the trap of predatory lenders who take advantage of your situation. Knowing the red flags can help you avoid unfair loan terms and excessive fees. Here are some things to watch out for:
Extremely High Interest Rates
If a lender is offering a loan with an APR well above 36%, proceed with caution. Payday loans and cash advances often come with interest rates that can reach triple digits, trapping you in a cycle of debt. Stick to reputable lenders, and don’t be afraid to walk away from offers that seem too steep.
Lack of Transparency
A trustworthy lender will clearly outline all loan terms, including interest rates, fees, and repayment schedules. If you notice any vague or confusing language, or if a lender refuses to provide clear details, consider this a red flag. Transparency is key to ensuring you understand exactly what you’re getting into.
Pressure to Sign Quickly
Predatory lenders often pressure borrowers to sign loan agreements without giving them enough time to review the terms. They may claim that the offer is only available for a limited time or that your approval could be revoked if you don’t act fast. Take your time and never feel rushed into signing anything without fully understanding the terms.
No Credit Check
While it may seem appealing to find a lender that doesn’t check your credit, this is often a sign of a predatory lender. Legitimate lenders want to ensure you can repay the loan, and conducting a credit check is part of that process. Be wary of any lender that offers “guaranteed approval” or skips credit checks entirely.
Unreasonably High Fees
Some lenders tack on fees for nearly everything, from application processing to loan disbursement and even payment options. Look for any mention of extra fees in the fine print, and avoid lenders who seem to be nickel-and-diming you at every turn. A legitimate loan shouldn’t be weighed down with excessive charges.
Final Thoughts
Short-term loans can provide a quick solution when unexpected expenses arise, but they come with their own set of challenges. Whether you choose a cash advance or an installment loan, it’s important to weigh your options, understand the costs involved, and choose a lender you trust.
By planning your repayment carefully and staying on top of your payments, you can avoid getting caught in a cycle of debt. Take your time to review the best loan types for your situation, and always make sure you’re borrowing only what you can afford to repay.
