With high costs that 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. 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:
The minimum loan amount a lender is able to offer varies by state and type of loan. Because borrowing from a short-term lender can have dangerous consequences if you fail to repay, we rate lenders that allow you to borrow a smaller amount more highly. The larger the minimum loan amount, the lower our star rating. But keep in mind that you aren’t required to use the full amount you borrow. While you will still have to pay fees, you can return some amount of funds to your lender as a repayment. This will help you avoid overspending and limit the amount you have to repay.
How we rate cost
★★★★★— Optional fee or APR under 36%
★★★★★— 36% to 200%
★★★★★— 201% to 300%
★★★★★— 300% to 499%
★★★★★— 500% or more
Short-term loans are notoriously expensive. Many lenders have an APR well over 300% — which means you may pay anywhere from $10 to $20 per $100 borrowed as a finance charge. Higher ratings go to lenders that charge less than 200%, with the highest rating going to some pay advance apps that don’t require you to tip when you borrow.
How we rate transparency
★★★★★— Clearly states fees, links to privacy policy, provides info on state laws and the like
★★★★★— Clearly provides terms of service, only provides example fee structure
★★★★★— Doesn’t state costs online
Unfortunately, short-term lenders aren’t always required to state the cost of the loan on their websites — but they do have to present all the information about the cost of your loan before you sign your loan contract. Because of this, we rate lenders that clearly state the cost of their loans online highly. Those that don’t provide any information about fees, rates or privacy options receive a low 1-star rating.
How we rate funding options
★★★★★— Offers ACH transfer, in-store pickup and other options
★★★★★— Only offers ACH transfer
★★★★★— Only offers in-store pickup
Lenders that have storefronts typically offer both ACH transfers directly to your bank account and in-store pickup, which earns them a high 5-star rating. Lenders that only operate online typically only offer ACH transfers, which earn them a slightly lower 4-star rating. And due to the limitations of needing to pick up your loan at a store, we rate lenders that only offer this option with two stars.
How we rate turnaround time
★★★★★— Same-day turnaround available
★★★★★— 1 to 2 business days
★★★★★— Longer than 2 business days
Because short-term loans are meant to be used for emergency expenses, we rate lenders that offer same-day turnaround with five stars. However, most lenders offer loans within one to two business days — which earns them a standard 4-star rating. It’s rare for lenders to take longer, but those that do earn a low 1-star rating.
How we rate customer service
★★★★★— Phone number, email and live chat
★★★★★— Phone number and email
★★★★★— Phone number or email
★★★★★— Email form
★★★★★— No contact information
While most short-term lenders only have a customer service phone number and email — which earns them a solid four stars — those that have a live chat option on their websites earn our top rating. If a lender only provides borrowers with a phone number or email, it earns three stars. Those with email forms that require you to submit your contact information and wait for a response earn two, and those that don’t provide any contact information earn a low 1-star rating.
How we rate customer reviews
★★★★★— Excellent customer reviews
★★★★★— Good customer reviews
★★★★★— Average customer reviews
★★★★★— Subpar customer reviews
★★★★★— Poor customer reviews
Customer reviews are an optional rating that we give to lenders that have been rated by at least 50 people on either Trustpilot or the Better Business Bureau (BBB). We base our customer review rating on whichever website has the highest amount of ratings.
How we rate other services
★★★★★— Offers at least one perk
If a lender offers one of these perks, it earns five stars. But these are optional categories — meaning we don’t give a low rating to a lender that doesn’t have these services or perks.
Credit builder loans
Bank account services
Prepaid debit cards
Wire transfers or money orders
Check cashing
Mobile app
How we determine drawbacks
★★★★★— Has one of these drawbacks
If a lender is based outside the US or has faced a lawsuit — especially from a state government, the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB) — it earns an additional 1-star rating. Be on the lookout for lenders with these. While they aren’t necessarily red flags, they can point to lenders that are lest trustworthy or reliable than others.
Based outside US
Faced class action lawsuit
Faced state, FTC or CFPB lawsuit
What we don’t consider
We review every lender with these categories in mind, but they aren’t the only factors that should play a role in your decision. Here are a few more factors you should consider when selecting a short-term lender:
State availability. Not all lenders operate in all 50 states. In fact, some states ban payday and other short-term loans. Ensure your lender is licensed to operate in your state and is following state laws before you borrow.
Minimum income requirement. Legit lenders will check your income to confirm that you can afford to borrow. But some lenders go one step further and have a minimum income requirement. If you don’t meet this, you won’t qualify for a loan.
Other eligibility requirements. You may need to have an active checking or savings account, be employed regularly or meet other eligibility requirements to qualify. Check with your lender to see if you’re eligible before you submit a full application.
Brick-and-mortar locations. If you want speed and in-person service, select a lender that operates physical storefronts. This often gives you access to other services, like check cashing and prepaid debit cards, and is often the fastest way to get your loan funds on the same day you apply.
Kellye Guinan is a freelance editor and writer, specializing in consumer lending. Her writing and analysis has been featured on Bankrate, MSN and MediaFeed. She holds degrees in anthropology and German language and literature from Middle Tennessee State University.
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