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One major drawback of short-term loans is the relatively high costs, but not all lenders charge the same fees and rates. While all short-term loans are going to have a higher APR than standard personal loans, some have lower rates than others.
Our top pick: LendYou Short-term Loans
Min. Loan Amount: $100
Max. Loan Amount: $15,000
Turnaround Time:
1 business day
Loan Term:
Varies
Requirements: $1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
Simple application
Quick decision
Bad credit OK
Our top pick: LendYou Short-term Loans
Get offers from potential lenders in minutes by filling out just one online form.
Min. Loan Amount: $100
Max. Loan Amount: $15,000
Turnaround Time:
1 business day
Loan Term:
Varies
Requirements: $1,000+ monthly income, direct deposit, US citizen or permanent resident, ages 18+
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
You can typically find low-interest short-term loans with some payday loan providers if it’s legal in your state or local financial institutions that offer payday loan alternatives across the country. :
Lenders that charge less than the state maximum APR.
Once you’ve taken a look at the state regulations, compare lenders and find ones that charges below this maximum. Some states have higher maximums than others and finding a lender that falls below these won’t be too difficult.
Lenders with a tiered rating system.
Some lenders do not have blanket interest rates for all borrowers, instead classifying borrowers on a tiered system. The classification can be according to a borrower’s credit score, due to a record of repaying previous loans on time, or even based on completing educational courses and earning points (as with LendUp).
Installment loan providers.
If you’re looking for lower, ongoing repayments you may want to consider an installment loan. These loans let you pay back over a longer period rather than in a single sum as with short-term loans. While the APR can still be high, the repayments are spread over terms of between two months and five years.
Federal credit unions.
Some federal credit unions offer payday alternative loans (PALs) as an affordable short-term financing option to all credit types. These are regulated by the National Credit Union Administration, which caps interest rates at 28% — well below the starting rate for most other short-term products.
Local banks and credit unions.
Many small banks and credit unions are actually Community Development Financial Institutions (CDFIs), which have an aim of improving the economic wellbeing of residents in your area. These tend to offer affordable short-term options to people who live nearby. Reach out to your local bank or credit union to find out if there are any low-interest options for you.
When you’re comparing low interest rate short-term loans, consider following factors:
Interest. This is obviously your key consideration. Remember to check the state regulations before you apply, and compare what different lenders are charging for residents of your state.
Fees. Most states have caps on the fees lenders can charge you, but others will not. Check for upfront and ongoing fees to get an idea of what you might have to pay.
Processing time. Not all short-term lenders can have your money to you in the same amount of time. If you apply online you can have your money sent straight to your account when you’re approved, usually in a few hours or on the next business day. You may also have the option of picking the cash up in-store if the lender has a branch network, and if you apply in-store you can wait and pick up your money in less than an hour.
Looking for a low-interest short-term loan might not translate into an inexpensive loan. That’s because most lenders charge a flat fee instead of interest — especially when it comes to payday and auto title loans that you repay all at once.
Instead, you might want to look for a loan with a lower APR. Your loan’s APR is its total cost — including both interest and fees — expressed as a percentage of your loan amount. Just make sure to compare the APR on loans with the same terms: The less time you have to pay back a loan with a term of less than one year, the higher the APR.
Cautions to consider before applying
Make sure you go through the terms and conditions before accepting the contract so you have a clear understanding of the fees and charges. If you think you may face problems in repaying the loan, reconsider taking it in the first place. Are instant short-term loans legit?
Frequently asked questions
You can apply if you have poor or bad credit history, provided you have a steady source of income. You should be a US citizen or permanent resident and meet state-specified minimum age requirements.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at The Lizzies. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).
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