A short-term loan is a type of loan that requires full repayment within a few months to a year. The best short-term loans offer low minimum APRs and a wide range of dollar amounts, and some lenders do not charge an origination fee to get a loan.
However, there are a few types of short-term loans that you should avoid, like payday loans and auto title loans.
Short-Term Personal Loans
Personal loans are your best option if you're looking for a short-term loan. These loans can be used for almost anything, and they have APRs as low as 2.49%, minimum term lengths as short as 6 months and funding as soon as the day you apply.
To see what lenders may approve you and which rates may be available to you, check out the free pre-qualification tool on WalletHub.
Short-Term Business Loans
Short-term business loans are a little different than short-term personal loans. They offer a wide range of loan amounts and have repayment periods of up to 18 months, but they also typically have a higher APR and may require more frequent payments. Some lenders require payments to be made daily or weekly, but the payments are usually smaller than a normal monthly payment.
Short-Term Loans to Avoid
Payday lenders offer very expensive, short-term loans. These loans are usually small ($500 or less), and you have to pay them back within a few weeks. Lenders will typically charge outrageous fees, equivalent to a 400%+ APR.
Auto title loans
Auto title loans are secured by the title of your car - the document that grants you ownership of the vehicle. The lender will give you a portion of the car's value upfront, and you're expected to repay the loan within 15 to 30 days. If you don't repay the loan, you risk losing your car.
Pawnshops allow you to bring in your items and get a portion of their worth in return. You then have to repay the money with interest within a certain amount of time to get your items back. If you don't repay the loan, the shop will take ownership of the items and sell them.
Ultimately, unlike payday, auto-title, and pawn-shop loans, a short-term personal loan can be great if you have temporary borrowing needs and the ability to repay the loan quickly. If you're ready to start comparing loan offers, check out the top-ranked short-term loans on WalletHub.