When short term loans may come in handy? There are times in life when you need money fast. Perhaps your roof has sprung a leak. Or your family’s primary breadwinner is suddenly out of work. Or you need some additional cash to keep your side hustle going. When situations such as these arise, a short term loan may be just what you need.
Short term loans are designed to provide a temporary fix for personal or business situations where cash is needed quickly. Lenders extend these types of loans when they believe that the borrower will pay back the funds reliably, with interest, and in a short amount of time.
The Pros and Cons of Short Term Loans
Short-term loans offer a lot of benefits, including providing a source of funds in emergency situations or helping businesses get a quick infusion of cash. However, short term loans also come with disadvantages as well. For that reason, it’s best to evaluate the pros and cons associated with short term loans, so that you can make an informed decision whether this type of loan is the right choice for your financial situation.
Benefits of Short Term Loans
- Less Interest over the Life of the Loan: Because the loan term is so short, it’s impossible to rack up a lot of interest over the life of the loan. Compare the interest accrued with a long term loan versus that of a short term loan and you will see just how much will be saved in interest.
- Short Term Loans are Easy to Secure: Because the requirements involved with getting a short term loan are much less stringent, those with bad credit have a much greater chance of securing a short term loan when the need for cash arises.
- Cash Can Be Accessed Quickly: Because there is less time required for the lender to underwrite a short term loan, funds can be accessed much more quickly than they can be when compared with their long term counterparts. Because the processing time is so fast with a short term loan, it’s quite possible for you to receive your cash the very same day that you apply.
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Downsides of Short Term Loans
- Short term Loans Come With Repayment Risks: Because short term loans must be paid back quickly, it’s entirely possible that the short term situation that brought about the need for cash in the first place will not have been resolved when it comes time to pay back the loan. Failure to repay can lead to many unfortunate consequences, such as a lien being put on your home.
- Origination Fees Can Be Costly: When it comes to short term loans, origination fees can be quite costly. Many people are unfamiliar with origination fees but, essentially, it is a sum that the lender charges for issuing the loan. When it comes down to it, origination fees can be more painful than interest for borrowers.
- Bad Credit Can Mean High-interest Rates: While short term loans can be obtained by those with bad credit that less-than-stellar credit score could prove to be problematic when it comes to establishing an interest rate. The practice of charging borrowers with bad credit a higher interest rate might seem counter-intuitive, since this will seemingly only make matters worse for those with financial problems, but some lenders do this in an effort to mitigate their risk when taking on this type of loan. However, it is possible to avoid high-interest rates on bad credit loans by shopping around for a good lender.
Our Top 8 Short Term Loans Providers
Now that you know what a short term loan is, as well as the pros and cons that come along with them, let’s take a look at the particulars associated with the top eight lenders that you should consider when you find yourself in need of funds.
1. Rocket Loans
- Loan amounts: $2,000 – $45,000
- Typical APR: 5.98% – 29.99%
- Time to receipt of funds: As soon as the same day
- Time for repayment: 3 or 5 years
- Credit check?: Yes
Fees
- Origination fee: 1% – 6% of loan amount
- Late fee: $15 after 10-day grace period
Minimum Qualifications
- Minimum credit score: 640
- Minimum credit history: Two years
- Minimum annual income: $40,000
2. Money Mutual
- Loan amounts: $250 – $2,500
- Typical APR: Dependent on lender
- Time to receipt of funds: As soon as the next day
- Time for repayment: Dependent on lender
- Credit check?: No
Fees
- Origination fee: Not specified
- Late fee: Not specified
Minimum Qualifications
- Minimum credit score: None
- Minimum credit history: Not specified
- Minimum annual income: $9,600
3. Best Egg
- Loan amounts: $2,000 – $35,000
- Typical APR: 5.99% – 29.99%
- Time to receipt of funds: As soon as one business day
- Time for repayment: 3 or 5 years
- Credit check?: Yes
Fees
- Origination fee: 0.99% – 5.99%
- Late fee: $15
Minimum Qualifications
- Minimum credit score: 640
- Minimum credit history: Not specified
- Minimum annual income: Not specified
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4. Avant
- Loan amounts: $2,000 – $35,000
- Typical APR: 9.95% – 35.99%
- Time to receipt of funds: As soon as the next business day
- Time for repayment: Monthly over 2 to 5 years
- Credit check?: Yes
Fees
- Administrative fee: 4.75%.
- Late fee: $25 (in most states)
Minimum Qualifications
- Minimum credit score: 580
- Minimum credit history: Not specified
- Minimum annual income: $20,000
5. Cashusa.com
- Loan amounts: $500 to $10,000
- Typical APR: 5.99% to 35.99%
- Time to receipt of funds: As soon as one business day
- Time for repayment: 90 days to 6 years
- Credit check?: Yes
Fees
- Origination fee: Dependent on lender
- Late fee: Dependent on lender
Minimum Qualifications
- Minimum credit score: No minimum
- Minimum credit history: Not specified
- Minimum annual income: $12,000
6. LightStream
- Loan amounts: $5,000 – $100,000
- Typical APR: 3.99% – 16.99% (with autopay)
- Time to receipt of funds: As soon as the same day
- Time for repayment: 2 to 7 years and to 12 years for home improvements
- Credit check?: In some instances
Fees
- Origination fee: None
- Late fee: None
Minimum Qualifications
- Minimum credit score: 660
- Minimum credit history: Not specified
- Minimum annual income: Not specified
7. Cashadvance.com
- Loan amounts: $100 – $1,000
- Typical APR: 15% – 1564%
- Time to receipt of funds: As soon as the next business day
- Time for repayment: 7 days to 1 year
- Credit check?: Not specified
Fees
- Origination fee: Not specified
- Late fee: Dependent on lender
Minimum Qualifications
- Minimum credit score: Not specified
- Minimum credit history: Not specified
- Minimum annual income: $12,000
8. PersonalLoans.com
- Loan amounts: $500 – $35,000
- Typical APR: 5.99% – 35.99%
- Time to receipt of funds: As soon as the same day
- Time for repayment: 90 days – 6 years
- Credit check?: Yes
Fees
- Origination fee: 1 – 5%
- Late fee: Not specified
Minimum Qualifications
- Minimum credit score: 580
- Minimum credit history: Not specified
- Minimum annual income: $24,000
