Best short-term personal loans

An estimated 37% of Americans can’t afford a surprise expense over $400, according to recent research by Empower. If you’re one of them, short-term personal loans may help you bridge the gap. While the shorter terms often mean you’ll have higher monthly payments, they also typically help to keep your overall interest costs down. 

The problem is — they can be hard to find. Many lenders have loan terms that start at the two-year mark or higher. If you’re having trouble finding one, here’s a lineup of the best short-term loans on the market. 

Best short-term personal loans

Methodology

We evaluated the best personal loan lenders for short-term loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date. 

Read our full lender rating methodology for more information.

What is a short-term personal loan and how do they work?

A short-term personal loan refers to a personal installment loan with a relatively short repayment period. While there’s no official definition of a “short term,” personal loan terms often range from 24 to 84 months. Being so, a term of less than 24 months will be on the shorter side. 

When you get a short-term personal loan, the lender provides you with a lump sum. If there’s an origination fee, it’s often deducted from the loan amount before the funds are sent to you. You then repay the full amount, plus interest, through fixed payments over a set term. The interest rates are often capped at 35.99%, while origination fees can go up to 12%.

Pros and cons of short-term personal loans

Pros

• Lower interest rates: A short loan term reduces the risk for a lender because you’re borrowing the money for a shorter amount of time. As a result, you can often get a lower interest rate. For example, the average interest rate on a three-year personal loan is 4.5% lower than the average rate on a five-year loan. 
• Lower overall cost: The shorter your loan term, the less time you’ll spend paying interest, which lowers your overall borrowing costs. For example, a $5,000 loan with a 20% interest rate will cost $549 more with a two-year term than a one-year term.
• Payoff debt fast: A short-term personal loan puts you on the fast track to paying off debt so you can be debt-free sooner. 

Cons

• Smaller loan amounts: Shorter-term loans come with higher monthly payment amounts, which can lower the total loan amount you can borrow. Lenders usually won’t let your monthly payment put your debt-to-income ratio over their limit. 
• Harder to find: Short-term personal loans are hard to find. Most lenders offer term ranges that start at two years or longer.
• Higher payments: Shorter loan terms mean fewer payments but higher monthly payment amounts. For example, a $5,000 loan with a 20% interest rate would have a monthly payment of $463 on a one-year loan, compared to $186 on a three-year loan.

Where can I get a short-term personal loan?

You can find personal loans with short terms from financial institutions such as banks, credit unions, and online lenders. Here are a few examples:

• PNC Bank offers personal loans with terms from six to 60 months
• Zable offers personal loans with terms from 12 to 60 months
• U.S. Bank offers personal loans with terms from 12 to 84 months

While short-term personal loans do exist, they can be hard to find. Many popular lenders like Best Egg, Avant, Happy Money, and Lending Club offer terms from two to five years. That said, most lenders don’t charge prepayment penalties, so you can get a longer loan term and manually pay it off early. However, you’ll want to make sure your extra payments go solely to your principal balance.

What are short-term loan interest rates?

A short-term personal loan interest rate is the percentage of a loan amount you pay in interest per year of a loan term. For example, if you have a $2,000 personal loan with a one-year term and a 15% interest rate, you would pay approximately $300 (15% of $2,000) in interest over the year term. Some short-term credit products come with interest rates, while others don’t. 

Short-term loan interest rates

How to qualify for a short-term loan

Personal loans are typically unsecured, so eligibility hinges on your credit and income. Lenders often perform soft credit checks during prequalification—which won’t ding your score—and hard credit checks during the final application, which may temporarily lower it. Additionally, they’ll ask you about your income, employment situation, living situation, and more.

Overall, they’re trying to determine how much risk you present and how much loan you can afford. Some lenders are more lenient than others, so it can help to look for a lender that caters to borrowers of your credit profile.

Alternatives to short-term personal loans 

Payday alternative loans (PALs)

Payday alternative loans (PALs) are short-term loans available through certain federal credit unions and regulated by the National Credit Union Administration (NCUA). They are designed to offer credit union members an affordable alternative to high-APR payday loans. You can currently find PALs or PALs II with loan amounts up to $2,000, terms up to 12 months, and interest rates up to 28%. 

Online payday advance apps

Online payday advance apps like Earnin and Dave allow you to create accounts and request cash advances of a few hundred dollars per pay period. Eligibility depends on your bank account activity, rather than your credit, so this can be a good option if you’re credit-challenged. Further, the advances are often very low-cost, if not free. Once you take an advance, it gets automatically repaid out of your next paycheck. 

Credit cards 

A credit card can be a good option if you need a short-term loan, especially if you can get one with a 0% APR introductory period, or have an existing offer for a balance transfer. Some introductory periods last as long as 21 months or more, so if you pay off your amount in that time you can avoid interest. You can charge the expense and then pay it off as you go, as long as you make at least your minimum payment each month. 

Credit cards offer flexibility but can come with high interest rates, especially if the introductory period ends before you finish making payments. Consider that the average rate on a credit card is 22.51% compared to 11.92% on a two-year personal loan. 

“Buy now, pay later” (BNPL)

BNPL loans are a type of installment loan provided by companies like Affirm, Klarna, and Afterpay. They often allow you to split a purchase into four interest-free biweekly payments, or a longer period with interest charges. You can find BNPL options on the checkout pages of many online retailers or can initiate purchases from within BNPL apps. 

How to apply for a short-term loan

Applying for a short-term personal loan can be relatively quick and easy. Follow these steps:

1. Check your credit: Head to annualcreditreport.com and request copies of your credit reports. You can currently get free weekly reports from all three credit bureaus. Review your reports to ensure everything is accurate. If you spot any errors, dispute them with the credit bureau. Also, look for ways to make quick improvements to your credit scores, such as adding bills through Experian Boost or paying down outstanding credit card balances. You want your credit in the best shape possible so you can get the lowest possible rate on your loan.
2. Assess your needs: Think over why you need the loan and the exact amount you need. Additionally, review your budget to see the maximum amount you can spend on a monthly loan payment.
3. Shop around: Shop around for reputable lenders that offer short-term personal loans. The list above is a good starting point. Many lenders publish their repayment term ranges on their websites. However, if you can’t find them, the terms are often shown during the quote process. 
4. Compare quotes: Get quotes from at least three short-term loan lenders and compare them side by side. Consider which loan offers the best overall value, including the loan amount you need, a monthly payment amount that fits your budget, and a competitive cost. A platform like Credible can help speed up the process by allowing you to request quotes from a pool of lenders with one application. 
5. Apply: Once you find the best loan for your situation, complete the full application process. You’ll need to allow a hard credit check, which may lower your score temporarily, and may need to submit verification documents or link your bank account. Once you get approved, the lender will send the loan funds to the bank account you provide generally same-day or in up to five business days.

FAQ

What are common personal loan term lengths?

Personal loan terms often range from two to seven years. In rarer cases, they start as low as six months and go up to 10, or even 20 years, depending on the loan type, like home improvement loans. 

What is the biggest difference between short- and long-term loans?

The main difference between short- and long-term loans is the amount of time you have to repay the loan amount. Short-term loans require repayment in less than two years while longer-term loans give you two years or more. However, the repayment term impacts many other aspects of a loan, such as the amount you can qualify for, the interest rate you’re assigned, your monthly payment amount, and the total loan cost.

What is the shortest term for a personal loan?

The shortest personal loan term is around six months with PNC Bank, but terms of one year or more are much more common. You may be able to find an even shorter loan elsewhere from a smaller lender like a regional bank or credit union. 

Can I get a short-term loan with bad credit?

It is possible to get a short-term loan despite having bad credit. Short-term loans present less risk to lenders than long-term loans and certain lenders cater to bad-credit borrowers. You can find out if you prequalify by requesting quotes from bad-credit lenders.

How can a short-term personal loan save you money?

A short-term personal loan is going to cost you money. Lenders charge interest and sometimes fees. However, it could save you money over an alternative credit product like a credit card or payday loan. It could also save you if you use the loan funds to avoid more expensive financial consequences, like the costs that come with an eviction or penalties for paying a bill late.