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How to qualify for a personal loan

If you ever find yourself in a situation where you are in need of funds to finance a purchase - including work on your home, family needs, or to consolidate an existing debt - a personal loan can be a good way to get the money that you need.

The process is typically the same whether you choose to borrow from an online lender, bank or credit union. Personal loan terms generally range from between 24 and 60 months, but this can differ; some may go up to as much as 72 months. Much like a credit card or other loan types such as home mortgages and car loans, personal loans are repaid in monthly instalments.

To qualify for a personal loan you must:

  • Be 18 years of age or above
  • Provide proof that you are a US resident
  • Provide proof of income
  • Have an email address and phone number
  • Not be bankrupt

In order to determine how capable you are of making repayments on a loan, lenders will run a credit check. Good credit will put you in the best position to receive a good interest rate. But if for any reason your credit score is low, you still have options.

What is a short term loan?

A short-term loan, simply put, is a loan where an amount is borrowed from a lender and that amount, plus interest, is paid back in a relatively short amount of time - usually less than a year. You can request short term loans online, or with a bank or credit union.

Short-term loans are designed to be paid back over the courses of months rather than years, and they therefore come with a high APR to make up for the fact that their term lengths are so much shorter than what you would get with other loan types. 

How a short-term personal loan works

Short term personal loans are a great way to get your hands on the finance that you need.

What makes them so popular is that they work by offering you the money you need, when you need it, without requiring collateral. For anyone who has found themselves in a pinch unexpectedly, a short term personal loan can provide a way out that is fast and easy, often with lower APR than a credit card.

These loans are, of course, not without risks and it may be the case that some people are not in the best position to make use of them safely. But for those who are, they can be a really excellent resource.

How to get a short-term personal loan

To get a short term personal loan you must follow these steps:

  • Work out how much you need to borrow. It is important to know what loan amounts you can afford to borrow and to understand fully what you will be expected to pay back, as well as reading the full terms and conditions carefully. Make sure to account for any origination fees which certain lenders may take from your total loan amount.
  • Be aware of your credit score as this will affect the rate of APR (interest rate) you will receive. Whether you have bad credit or not may also influence whether you choose to add a co-signer to your loan. This is because a co-signer with a good credit score may lead to you receiving more favourable rates as their good credit will improve your overall credit picture.
  • Shop around for lenders. There are many different lenders offering loans with many different good and not-so-good qualities. Wading through them can be time-consuming, but it is vital that you make an informed decision. Luckily, with the help of a good loan broker like Loanza, it has never been easier to get connected to the perfect lender for you.
  • Complete the approval process by submitting the necessary pay stubs, personal identification and tax documents once you have accepted a loan that you have been offered.
  • Start making loan payments. Typically within a week of finalising you will receive the loan, sometimes earlier depending on the lender. At this point, it is a good idea to set reminders and plan ahead to the first payment due date. You might also want to think about setting up automatic payments, as this can help you avoid missing due dates accidentally, and may even come with a discount from some lenders.

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How a short-term loan can affect your credit

As with any other type of loan, a short term loan has the potential to affect your credit score. 

When you borrow money - any amount of money - you enter into a promise to repay under the agreed-upon terms. As your credit score is a numerical reflection of your history with debt, how reliably you repay your short term loan will become a signal to future lenders. Either signifying that you have lived up to your previous promises to repay a debt, or that you have not.

Essentially, if the money you borrow is repaid promptly and in accordance with your loan terms, your credit rating will be affected in a positive way; on the flip side of this, failure to repay your loan will lead to your credit rating suffering. 

Drawback of short-term loans

Short term loans can be immensely useful to the right people. Understanding the potential disadvantages of taking out a short term loan can help you to decide whether or not it is the right course of action for you. Drawbacks of short term loans include the following:

  • High interest rate. Short terms loans come with higher rates of interest than long term loans, meaning that the repayments may potentially have a more significant effect on your monthly finances than a loan with a longer repayment term.
  • The borrowing cycle. Short term loans are generally not overly difficult to obtain, which can make them very alluring when you find yourself in a bind. However, borrowing to repay what you have already borrowed can lead to you becoming trapped in a cycle. Short term loans should be considered very carefully, as becoming too dependent and taking out multiple loans can lead to financial stress.
  • Negative effect on your credit. If you are unable to pay your loan by the scheduled time, it will negatively affect your credit rating which can, in turn, affect you financially.
  • Early repayment penalties. In order to make lending on a short term basis worthwhile profit-wise, some lenders choose to impose a certain time frame on the repayment of your loan. If you choose to pay back your loan early, these lenders may require a penalty payment.

Benefits of short-term loans

Short term loans also come with a number of advantages, which you should consider carefully. Benefits of a short-term loan include the following:

  • Speedy approval. For anyone in need of funds quickly, the quick short term loan request approval time might make it suitable. As the loan amount for short term and payday loans is fairly limited, the lending requirements are generally also more relaxed which makes it quicker and easier to get approved. It depends on the lender of course, but some short term loans can be approved on the same day, in a matter of hours. As early as the next business day you may have access to the funds you need.
  • You pay less overall in interest. People often find the high interest rates of many short term loans daunting. However, when you consider the shorter loan period, it is often the case that the amount you pay back is less than it would be if your loan was spread out over a longer time.
  • Your credit rating can be improved. By taking out a loan for an amount that you are confident you can repay within the agreed-upon time frame, you demonstrate a good history with debt.
  • Convenient and flexible. These types of loans are easy to request as most of the lenders that offer them allow you to complete the request online, on their websites. Also, as the loans are short term, the stress of keeping up with the repayments is short-lived.

What are short term personal loan interest rates

Short term loans often have a significantly higher APR than that of the usual bank financing. These loans generally have an APR of between about 390% and 780%, with the average APR for a short term loan sitting at around 400%. In the case of personal loans or credit cards accessed through a standard bank, the APR tends to be a fair bit lower. For example, 15% APR is about the national average for a credit card.

It can be a bit difficult to visualise, in money amounts, how APR for short term loans works. An example would be; if you were to take out a $200 loan with a $30 loan fee, with a 12 day repayment term - the APR would be 456.25%.

Of course, your interest rate can vary widely depending on your lender, the loan amounts, and the length of your loan terms.
 

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What are the types of short-term personal loans

There are a number of different types of short term personal loans, including:

  • Payday loans. This can be a great route to go for people who have poor credit, are in need of an emergency cash loan and are confident in their ability to make the repayments at a later date. The fees and interest rates of payday loans are higher than those of other short term personal loans.
  • Merchant cash advances. This unsecured cash injection operates like a loan but is really a cash advance. This is ideal for businesses which see a fair bit of card transactions each month but do not have many assets, as it ‘secures’ lending using your card terminal. A percentage of your revenue is taken as repayment.
  • A line of credit. With a line, you can borrow in increments, make repayments, and then continue to make use of the line and borrow for the duration that it remains open. You will not be charged interest by the bank on the amount which you do not use.
  • Bridge loans. These loans are most often used in real estate, allowing you to purchase a new home and continue to finance your existing property while you wait for it to sell. With the money from the sale of the existing property you can pay back the loan, although bridge loans do tend to come with high interest rates and closing costs.

How can I get a small loan fast?

If you’re looking to get a small loan and need it fast, Loanza's quick and simple process is set up to make that happen. Our panel of lenders includes many who are offering same day loans, with terms and conditions to suit anyone.

You could have possession of the funds you need in a matter of minutes from when you are approved. Although the speed of receiving the funds into your account is subject to the procedures and policies put in place by your bank.

Can I get a short term loan with bad credit?

In short - yes you can! There are plenty of lenders who are comfortable offering bad credit loans as a relief option for individuals with limited borrowing opportunities. 

Short term loans are designed with the needs of people with lower credit scores in mind. But not all lenders operate the same and every loan request is looked at on its own merits, meaning that approval is never a guarantee. 

It is a good idea to be cautious when it comes to taking on any loan; even more so if your credit is bad. You should make sure that anyone you consider doing business with on a bad credit loan is trustworthy by keeping an eye out for red-flag warnings. For instance, if the lender;

  • Does not require a credit check
  • Does not check your income
  • Guarantees that you will be approved
  • Cannot be found online in any customer reviews
  • Does not have a Better Business Bureau ranking

It may be a good idea to look elsewhere, as these are indicators that you may be scammed. Before making a final decision, consider the pros and cons carefully and protect yourself by consulting with a dedicated loan broker like Loanza to find your best options.

Where can I get a short term loan?

At Loanza we can help you find the short-term loan that is perfect for you. 

Don't waste time searching for 'short term loans near me' and attempting to wade through all of the many options on your own! When you search with us it is free and secure, with no hidden fees, obligations or risks to your credit score. Our extensive network of the best direct lenders means that you have great chances to connect with a good fit for your needs. Our process is super easy - just take 2 minutes to fill out our simple form.

No matter how good or bad your credit may be, you are always only a few clicks away from being connected to a reliable lender. Getting a loan has never been easier!
 

Looking for a short-term loan?

We can connect you to a trusted lender in minutes, even if you have bad credit.

Get Started Now