Short-term loan provider ratings methodology

How we determine the score for our short-term loan reviews.

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With high costs than can mean paying back double or even triple what you borrowed, short-term loans are best saved as a last resort. But we understand that sometimes they’re the only option when you need money fast and have less-than-perfect credit. That’s why we put together an independent rating system to help you weed out predatory lenders and find a company you can trust.

When rating a short-term lender or pay advance app, our researchers consider five factors: loan amount, application process, fees, customer reviews and borrower experience. Use this information as a starting point when comparing your options. Then read more about each lender in our comprehensive review of rates, fees and terms so that you can be sure you’re making the best decision for your situation.

Our ratings

We rate loans using a system of one to five stars:

★★★★★ — Excellent

★★★★★ — Good

★★★★★ — Average

★★★★★ — Subpar

★★★★★ — Poor

How we rate the range of loan amounts

Because of the wide variety of state laws that govern short-term lending, we base our rating on not only a wide range of loan amounts, but also state availability. Generally, the more states a lender offers products in, the better its rating.

The typical loan amount range depends on the type of short-term loan a lender offers:

  • Payday loans. Typically range from $100 to $500. Lenders that offer less than $100 or more than $500 with a lump-sum repayment earn a higher rating.
  • Installment loans. Typically range from $1,000 to $5,000. Lenders that offer less than $1,000 or more than $5,000 with multiyear repayment terms earn a higher rating.
  • Auto title loans. Typically range up to $10,000. Lenders that offer more than $10,000 — or in some cases, less than $1,000 — earn a higher rating.

Borrowing from a short-term lender can be dangerous: The more you borrow, the higher the fees you’ll repay on top of the principal amount. While a lender may earn a good rating because of its range of loan amounts, ensure that your budget can support the payment schedule required before applying.

How we rate the application process

The application process is the steps it takes for you to get your loan funds. How simple a form is, the information you’re required to submit and how you receive your funds all play a role in a lender’s final rating.

We also account for turnaround time. Lenders that can transfer funds in one to two business days — or make your funds available for same-day pickup at a store location — are rated better than lenders that take multiple days to disburse your funds.

Auto title loans may earn a lower score, because you’re typically required to visit the lender to have your vehicle appraised. Connection services also receive lower scores because you must finalize your information with the lender you’re connected with — adding another step to the application process.

How we rate interest rates and fees

We look at the finance charge — expressed as the loan’s APR — as well as any late fees or other costs. Generally, higher ratings go to lenders that offer an APR below the legal limit allowed by the states it services. Lenders also earn a stronger score for minimal late fees, nonsufficient funds (NSF) fees or documentation fees.

How we rate customer reviews

Our rating is based on a lender’s Trustpilot and Better Business Bureau (BBB) pages. For both, we also consider the number of user ratings. A high score with only a handful of reviews isn’t weighed as heavily as a midrange score with thousands of reviews. Likewise, the lack of a Trustpilot or BBB page may also hurt a lender’s score.

Note our additional considerations for Trustpilot and BBB pages:

  • Trustpilot. We look at the lender’s overall score in addition to the number of users who have given the lender a 5-star, excellent rating.
  • BBB. We look at the lender’s overall rating and its accreditation status. We also check the number of positive reviews against the number of negative reviews and complaints. Any government action or lawsuits filed against the company will negatively affect its rating.

How we rate borrower experience

We rate borrower experience based on the perks or features a lender offers its borrowers beyond its loan products. Higher ratings go to lenders with easy-to-navigate websites that outline transparent rates and terms. For the best score, we look for lenders that are up front about costs and offer multiple ways to get in contact with customer service.

Lenders with an online presence and physical storefronts score better than lenders that offer only one or the other. We also like to see lenders that help borrowers build credit by reporting on-time repayments to the major credit bureaus. Offer services like bill pay, money transfers and check cashing are a plus.

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