Short-Term Loans: How To Get One When You Have Bad Credit

Whether you need money for car repairs, home improvement, or unexpected medical bills, short-term loans for bad credit can be very helpful. Keep in mind that many lenders charge higher interest rates if you don’t have excellent credit, but they’re still lower than payday loans.

If you only need to borrow a loan for a short time, the shorter repayment term can help keep the overall interest costs lower, but your monthly payments can be higher. Make sure you can afford the installments before you apply for the loan.

Teresa Dodson, a debt expert and the founder of Greenbacks Consulting, offers advice on using this type of loan. “Short-term loans are sometimes necessary for urgent situations,” she explains. “If you find that you need one and your credit isn't the best, just make sure you take out only what you need and what you can afford to pay back,” Dodson encourages.

What Are Short-Term Loans?

A short-term loan for bad credit is an installment loan with repayment terms under three years. Personal loans typically have loan terms ranging from two to seven years, but if you only need to borrow a loan for a short time, a short-term loan may be a better option.

Some lenders may look beyond your credit score when evaluating your loan application. However, you’ll have to provide documents such as pay stubs or other proof of income, Social Security number, and details about your debts to prove your creditworthiness.

Once approved, you’ll get a lump sum funding that you can pay back with interest over a fixed term. Short-term loans can come with higher annual percentage rates (APRs), especially if you have bad credit. However, you’ll also be able to get out of debt faster if you make the loan payments as agreed.

5 Short-Term Loan Lenders for People With Bad Credit

When borrowing a short-term loan with bad credit, it’s important to evaluate your options carefully. To select our top five recommendations, we reviewed 15 lenders based on factors such as loan amounts, interest rates, fees, eligibility requirements, ease of application, and customer reviews.

1. Upgrade

• Loan Amounts: $1,000-$50,000
• APR: 8.49%-35.99%
• Repayment Terms: 12-84 months
• Minimum Credit Score: 580

Upgrade offers quick funding and decisions and is a good loan option for borrowers with bad or fair credit. The entire process takes two to five days, and once your online application is approved, you can get the funds in your account on the next business day. However, you’ll pay 1.85% to 9.99% as a one-time origination fee.

2. Avant

• Loan Amounts: $2,000-$35,000
• APR: 9.95%-35.99%
• Repayment Terms: 12-60 months
• Minimum Credit Score: 550

Avant is a lending platform that offers unsecured and secured loans for bad credit. While it doesn’t allow you to apply with a co-borrower or co-signer, the lower minimum credit score requirement makes it easy to qualify. You’ll also pay an origination fee of up to 9.99% on the loan amount.

3. PenFed Credit Union

• Loan Amounts: $500-$50,000
• APR: 7.99%-17.99%
• Repayment Terms: 12-60 months
• Minimum Credit Score: 580

PenFed Credit Union is a good option for getting an unsecured loan for bad credit due to competitive interest rates, a $0 origination fee, small loan amounts, and a lower minimum credit score requirement. However, you’ll need to be a member to apply for the loan.

4. Oportun

• Loan Amounts: $300-$10,000
• APR: Up to 35.99%
• Repayment Terms: 6-46 months
• Minimum Credit Score: None

Oportun’s personal loans come with a higher APR than competitors, but the main benefit is that you don’t need a credit score to apply. With a relatively small minimum loan amount, these loans are widely accessible but are not available in all states.

5. OneMain Financial

• Loan Amounts: $1,500-$20,000
• APR: 18%-35.99%
• Repayment Terms: 12-60 months
• Minimum Credit Score: 500

OneMain Financial offers secured and unsecured loans for bad credit borrowers. These short-term loans come with higher APRs compared to others on our list, but with relatively lower FICO score requirements, they can be a better alternative to predatory products like payday loans.

Types of Short-Term Loans

Before you borrow a short-term loan for bad credit, it’s important to have a clear understanding of the types of loans available and how they work.

Direct Lenders

Direct lenders are financial institutions that loan money directly to their consumers. When you borrow from a direct lender, you won’t be working through another company. This usually translates to clear communications, quick loan approval, and fast funding.

Secured Loans

Secured loans require you to provide some type of collateral, such as a vehicle or savings account, to borrow funds. With less risk involved for the lender, the interest rates can be lower even if you have a low credit score. However, you do risk losing the collateral if you default on the loan.

Unsecured Loans

Unlike secured loans, unsecured loans don’t require any collateral, so you don’t risk losing your assets. However, borrowers with a bad credit score will usually pay a high interest rate on unsecured loans.

Unsecured personal loans are widely available and easy to find. If you’re in need of quick funds but have no credit or poor credit, there are lenders that offer no-credit-check loans. Be sure to compare all the options you have on hand before you fill out a loan application.

Military Loans 

Military loans are the same as traditional personal loans. However, some lenders, such as USAA and Navy Federal Credit Union, specialize in offering loan products specifically to military members.

If you’re applying for a military loan at a credit union, there may be special qualification rules you should be aware of. For example, you’ll need to be a member of a credit union to apply for a personal loan. Regardless of the loan you apply for, it’s important to compare the loan terms carefully and ensure they align with your budget.  

You Can Get Short Term Loans Today Even With Bad Credit

Shopping around for short-term loans for bad credit can help you save money in the future. Pre-qualify with at least three lenders and compare your loan offers to find the best personal loans.

Be sure to only borrow what you’re confident you’ll be able to repay. Before you sign the loan agreement, read it carefully to make sure you’re aware of any potential fees, such as prepayment penalties, late fees, and origination fees.

Once you borrow the loan, be sure to set up autopay to make on-time payments and avoid late payment fees. Over time, you’ll be able to qualify for lower interest rates once you have good credit.