Instant loans give qualified applicants approval and funding immediately. They are especially helpful in emergency situations when the applicant cannot afford to wait through a lengthy approval and funding process. It usually takes up to 7 business days to get a personal loan funded, for example, and it can take several weeks with a home equity loan.
Given that instant funding is almost unheard of when it comes to personal loans, and instant home equity loans simply don’t exist, good instant loan offers are very rare. Most of the loans available instantly are predatory payday loans, auto title loans or pawn shop loans, all of which are far too expensive to pursue.
Instead, potential borrowers may want to look for other ways to get instant cash, such as using a credit card, borrowing from family or close friends, or drawing from a home equity line of credit that’s already open.
Where to Get an Instant Loan
Personal loan providers: It usually takes around a week to get a personal loan, with a few business days for approval and a few more for delivery of the funds. However, some lenders stand out with faster-than-usual timelines.
The only major lender with “instant” personal loans is LightStream. LightStream offers the opportunity to get a loan approved and funded the same day you apply, though it might be a few hours after you submit the application. Same-day funding is not guaranteed, but LightStream representatives say the vast majority of loans are funded within 2 business days.
Payday lenders: Most places advertising “instant” loans are payday lenders, which lend small amounts of money against your next paycheck. It’s true that these lenders are often the quickest way to get cash when you’re in a pinch. But borrowing from them is absolutely not worth it. You’ll have just 2 - 4 weeks to pay back the loan (when your next paycheck comes in). And the fees you’ll have to pay are unreasonable – often equal to an APR of 400% or more.
Auto title lenders: You can get instant cash from these lenders by securing a loan with the rights to your car. Naturally, that’s dangerous because if you can’t pay the loan back, the lender can repossess your car. Typically, auto title loans only last for up to a month, but you may be able to “roll over” your loan into a new month if you can’t pay in full. These loans can cost you up to a quarter of what you borrow.
Pawn shops: If you bring valuables into a pawn shop, they will offer you a fraction of the value in return, around 20% - 60%. The good news is that you can get your item back if you repay that money, along with interest, in a set number of months. The bad news is that interest is 2% to 25% per month, and the shop can sell your item if you don’t pay in full.
Family or friends: People with whom you have a trusting relationship may lend you cash on short notice. However, while you may be able to get money from them instantly, it’s smart to take the time to write up and sign a contract before any cash changes hands.
Drawbacks of Instant Loans
Instant loans may be convenient, but they come with a whole host of concerns, including:
- Limited selection: If you only look at lenders that offer instant loans, you narrow your choices considerably and have less opportunity to find a loan that offers the best possible deal.
- High rates: Unless you have excellent credit and are able to qualify for a good rate from one of the few personal loan providers that even offer the possibility of instant approval and funding, you may be forced to borrow from a predatory lender with high APRs.
- Low loan amounts: Most instant loan providers will only offer small-dollar loans, usually a few hundred to a few thousand dollars.
- Short payoff periods: You’ll generally have to pay off your loan in two weeks to a month, or a few months if it’s a pawn shop loan. With a personal loan, on the other hand, you may have several years to pay the loan off.
Alternatives to Instant Loans
Instant loans aren’t the only way to get fast cash. You can draw from a few other sources – most notably, credit cards and home equity lines of credit.
Credit Cards: Charging a purchase to a credit card is similar to taking out a loan. The credit card company pays for the purchase and then you pay them back over time, with a required minimum payment each month.
Credit cards are a middle-of-the-road option for instant funding. The average credit card APR is around 19% for new offers and 15% for existing accounts. That’s more expensive than the average personal loan, at around 10%. But credit cards are far cheaper than payday loans or auto title lenders. Plus, credit card debts are unsecured.
Credit cards allow for instant purchases – but only if you already have one. Credit cards often have instant approval, but then you have to wait 7 - 10 business days for them to get mailed to you.
HELOC: A home equity line of credit (HELOC) is another resource to get money on demand. It’s essentially a giant credit card secured by your house, where you can borrow up to a certain amount of money whenever you want. The draw period may or may not have a set endpoint.
While a HELOC can take over a month to get, it’s a good way to obtain cash nearly instantly once you have one. However, since HELOCs are secured by your home, you risk foreclosure if you’re unable to repay what you borrow.
One way to speed up the personal loan approval process is to check for pre-qualification. WalletHub’s free pre-qualification tool can help you check your approval odds with various lenders at the same time. This will make it easier to choose the right lender quickly. It may also lead to faster processing of your application when you actually submit it. Pre-qualification won’t hurt your credit at all.