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Many personal loan companies offer short-term loans, which can be defined as a loan with a repayment term of three years or shorter. Since the repayment terms are short, you pay less interest over the life of the loan in exchange for higher monthly payments.

But before you take out a short-term loan, you should consider potential downsides, like what a higher payment will mean for your budget. We cover more about short-term personal loans, their pros and cons, how to choose one, and some alternative options. We've also rounded up our list of some of the best short-term loans to consider.

What Is a Short-Term Personal Loan?

A short-term personal loan typically has a repayment term of 36 months or less. The loan is paid out as a lump sum that is deposited directly into your bank account. Afterward, you’ll repay the loan in fixed monthly installments, which include interest.

These loans are usually unsecured, meaning you don't have to pledge collateral, like a bank account or car title—but keep in mind that a lender can seize these assets if you don't repay the loan as promised.

You can get a short-term personal loan from several places, including banks, credit unions, and online lenders. Some money lending apps such as Cash App Borrow can also offer quick, short-term funding to eligible users.

Best Short-Term Personal Loans

You'll come across plenty of options when searching for a short-term loan. Here's our list of some of the best short-term personal loans to consider. 

Loan results will vary based on creditworthiness, loan purpose, loan amount, and other factors.

Best for Small Loan Amounts: PenFed Credit Union

Borrowers who need to borrow a small amount of money may find PenFed a good fit; its minimum loan amount is only $600, and it doesn’t charge any origination fees or prepayment penalties.

PenFed Credit Union

  • Loan Amounts$600 – $50,000
  • Loan Terms12 – 60 months
  • APR Range7.99% – 17.99%
  • Minimum
    Credit Score
    700 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

PenFed offers no fees and small personal loans as low as $600.


While you will need to become a PenFed member if you decide to get a personal loan there, anyone can apply for membership and the process is quick and simple. Many lenders have relatively high minimum loan amounts, but PenFed offers loans as small as $600, with no origination fees and competitive APRs. If you’d like to view personal loan rates with PenFed, you can do so without impacting your credit score.


  • Pre-qualification is available
  • No origination fee, hidden fees or prepayment penalties
  • Borrow as little as $600
  • Allows co-borrower
  • Funding as early as 1-2 business days after approval


  • Must be a member to receive the loan
  • No option for direct payment to creditors for debt consolidation

Best for Bad Credit: Avant

Avant’s minimum credit score requirement of 580 makes it a good option for borrowers with bad or fair credit. Once approved, borrowers can receive funds as soon as the next business day.


  • Loan Amounts$2,000 – $35,000
  • Loan Terms12 – 60 months
  • APR Range9.95% – 35.99%
  • Minimum
    Credit Score
    580 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Avant offers small personal loans that are accessible to borrowers with fair credit, with funding available as soon as the next day.


Avant is known for its personal loans that can be used for a wide range of purposes and are accessible for those with fair credit. Funding can be completed as soon as the next business day once approved. The minimum APRs tend to be higher than competitors, but the maximum APR is comparable to other online lenders. A unique feature offered by Avant is their flexible payment due date, which allows a 10-day grace period without incurring a late fee.


  • Loan terms up to 60 months
  • Low minimum credit score requirement
  • Flexible payment due date
  • Next day funding available


  • No physical locations
  • Origination fee of up to 4.75%
  • Relatively low maximum loan amount ($35,000)
  • High minimum APR
  • No joint applicant or co-signer

Navy Federal Credit Union offers secured and unsecured personal loans with no origination fees and competitive rates to active and retired members of the military and their family members.

Navy Federal Credit Union

  • Loan Amounts$250 – $50,000
  • Loan TermsUp to 180 months
  • APR Range8.99% – 18.00%
  • Minimum
    Credit Score
    None More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Personal loans from Navy Federal Credit Union come with no origination fees, quick funding, and can be a good fit for borrowers with less-than-ideal credit.


To qualify for Navy Federal Credit Union loans, you’ll need to be a member: you need to be a veteran, active-duty service member, Department of Defense personnel, or eligible military family member. In addition to offering co-signed personal loans for borrowers with less-than-perfect credit, Navy Federal Credit Union also offers secured personal loans. Borrowers won’t pay an origination or prepayment fee, and funding can be available as quickly as the same day. It’s worth putting this lender on your shortlist if your credit isn’t great and you’re looking to compare loan options.


  • Fast funding available
  • Minimum loan amounts as small as $250
  • Lengthy repayment terms up to 180 months for home improvement loans
  • Co-signer option available
  • No origination fee
  • Secured loan options available


  • High minimum loan amounts for longer-term loans
  • Need to be a member to get a loan

Best for Large Loan Amounts: SoFi

SoFi is an excellent pick for applicants seeking to borrow a significant amount of money. Loan amounts top out at $100,000, and it offers unemployment protection, which may come in handy if a borrower loses their job.

SoFi Personal Loans

  • Loan Amounts$5,000 – $100,000
  • Loan Terms24 – 84 months
  • APR Range8.99% – 29.49%
  • Minimum
    Credit Score
    680 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

SoFi's personal loan offering comes with no fees required and a high loan maximum that may be a good fit for those seeking large loans.


SoFi offers a competitive personal loan product that boasts no origination fees, no late fees, and a high maximum loan amount of $100,000. SoFi is one of only a handful of lenders offering loans as large as $100,000. If you need a substantial loan to cover a considerable expense, like a home renovation, SoFi’s high maximum can be a strong option. One standout feature of SoFi is that it offers unemployment protection, which might allow you to pause payments if you lose your job. Same-day funding is also available for qualified borrowers

Read the review


  • No origination fees, no prepayment penalties and no late fees
  • Loans up to $100,000
  • Unemployment protection available
  • Autopay rate discounts
  • Co-borrower allowed
  • Same-day funding available


  • No physical branches
  • High minimum loan amount
  • Good credit likely required

Best for Quick Funding: LightStream

LightStream is a great choice for borrowers with stellar credit. Same-day funding is available, and the lender doesn’t charge any fees.


  • Loan Amounts$5,000 – $100,000
  • Loan Terms24 – 144 months
  • APR Range7.49% – 25.49% (with autopay)
  • Minimum
    Credit Score
    660 or above More Info

    A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

LightStream is a solid online lender offering no fees, high loan maximums and low-rate personal loans for several purposes.


LightStream offers personal loans for several purposes, including debt consolidation, medical expenses, home improvement, weddings, car purchases and more, making this worth considering for those seeking flexibility. The lender offers relatively low rates compared to competitors, including autopay discounts. Its personal loans also have no origination fees or late fees, which can help keep borrowing costs low. However, borrowers will likely need to have good-to-excellent credit in order to be approved for a LightStream personal loan. Overall, it’s a good lender to add to your shortlist if you’re looking for flexible funding, no fees and a low APR. Lightstream may also disburse loans as soon as the same day you’re approved, making this lender a worthy choice if you need fast funding.

Read the review


  • Low minimum APR
  • No origination fees, no late fees
  • High loan maximum of $100,000
  • Autopay discount
  • Joint applications allowed


  • Rates and terms vary by loan purpose
  • No soft pull prequalification
  • Must have good-to-excellent credit
  • No physical branches

Why Are Loan Terms Important?

Loan terms are important because they can affect your required monthly payment and how much interest you pay over the life of the loan.

The following table breaks down the estimated costs of a $5,000 short-term and long-term loan with the same interest rate.

$5,000 loan for 2 years at 12.5% $5,000 loan for 5 years at 10.5%

Monthly payment



Interest paid



Total paid including interest



Good to know: Making more than the minimum monthly payment on your loan can save you hundreds of dollars in interest. Before you do this, though, check with your lender to see if they charge prepayment penalties.

Pros and Cons of Short-Term Loans

Like all financial products, short-term personal loans have pros and cons. Below are some common advantages and disadvantages to consider.


  • Flexibility. You can use a short-term personal loan for almost any purpose.
  • Lower total borrowing costs. With a short-term personal loan, you’ll pay less interest over the life of the loan than a long-term one.
  • Pay off debt sooner. Selecting a shorter loan term allows you to pay off your debt quicker.


  • Fees. Lenders may charge personal loan fees, like origination fees and late fees, that can increase your total borrowing costs.
  • Higher monthly payments. Short-term loans come with higher monthly payments than long-term monthly payments, which may be more difficult on your budget, depending on your financial situation.
  • Missing a payment can damage your credit. Lenders may report late payments to the three national credit bureaus—Equifax-Experian, and Transunion. As a result, your credit score could take a significant hit.

Common Uses of Short-Term Personal Loans

Borrowers can use short-term personal loans for nearly any purpose. Common uses include:

Some lenders may restrict you from using a personal loan for certain purposes, such as post-secondary education, investing, or real estate.

How to Choose a Short-Term Personal Loan

Comparing your options is one of the best ways to find a deal that works for you. When shopping for a short-term personal loan, here are some factors to keep in mind:

  • Annual Percentage Rates (APRs)
  • Fees
  • Repayment terms
  • Funding times 
  • Loan amounts 

If you need money fast, choose a lender known for quick funding. Some lenders advertised same or next-day funding, while some may take a few days to deposit funds into your account once approved.

Also, select a lender that offers your desired loan amount. Depending on the lender and your unique financial situation, you may be able to borrow up to $100,000.

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Alternatives to Short-Term Loans

If you believe the cons of short-term loans outweigh their benefits, consider these alternatives.

  • Balance transfer credit card. A balance transfer credit card could be a solid option if you want to consolidate high-interest credit card debt. Some card issuers offer cards with 0% APR promotional periods as long as 21 months. One downside, however, is that you have to pay a balance transfer fee. Plus, if you don’t repay the balance in full before the promotion expires, you’ll have to pay interest on any remaining balance.
  • Personal line of credit. Some banks and credit unions offer personal lines of credit. These lines of credit operate similarly to credit cards—you can borrow money up to a specified credit limit as needed.
  • Savings. If you don’t need to make a purchase immediately, save for it instead to avoid paying interest. You can open a high-yield savings account and deposit a set amount each month for expected and unexpected expenses.
  • Help from a family member. A family member may be willing to loan you money with a much lower interest rate than a traditional lender. If you find someone that agrees to doing so, discuss the loan terms and put them in writing. Pay off the loan as agreed to avoid causing a rift in your relationship.

Is a Short-Term Loan Right for Me?

Whether a short-term loan is a good fit for you depends on your unique financial circumstances. Taking one out could be a good idea if you can afford to make higher monthly payments. On the other hand, if you can't afford one, it's a better idea to explore alternatives.

Frequently Asked Questions

  • Choosing a short-term or long-term loan depends on your unique financial situation and how much interest you want to pay. If you want to save the most interest, choosing a short-term loan could be the best move.

    But if you prefer having a lower monthly payment, a long-term loan instead may be easier on your budget, as long as you're comfortable with paying more interest over the life of the loan.

  • Yes, it's possible to get a 3-month personal loan. Although traditional personal loan lenders usually only offer minimum loan terms of two years or longer, some buy now, pay later companies offer loans with shorter terms. For example, Fly Now Pay Later offers installment loan terms as short as three months; qualified applicants can use these loans to book flights with their partner airlines.

  • For traditional personal loans, the shortest term is usually one year, though some lenders offer loan terms as short as six months.

  • When you apply for a short-term personal loan, a lender generally performs a hard credit check, which may temporarily ding your credit.

    As long as you repay the loan on time, your credit score should recover and may even rise. But if you miss a payment, a lender can report your late payment to the three major credit bureaus, and this can cause significant harm to your credit.

  • The answer to this question depends on several factors, such as your credit score and income. For instance, if you have bad credit and no income, you'll likely find getting approved for a short-term loan more challenging than someone with good credit.


Jerry Brown

Jerry Brown is a personal finance writer and owner of the Peerless Money Mentor blog. He's written for major publications, such as Forbes Advisor, Fox Business, Business Insider, and Rocket Mortgage. Financial products he enjoys covering include credit cards, personal loans, and mortgages.

Awards & Distinctions

Jerry was nominated for the 2020 Plutus Award for Best Social Media for personal finance, where he was also a presenter.