Best Short-Term Loans for Bad Credit of January 2024 (2024)

Short-term loans are personal loans that typically come with a shorter repayment period. A lender will give you a lump sum that you’ll repay monthly at a fixed interest rate.

If you’re a borrower with bad or no credit, you can often still qualify for a short-term loan, though you will typically pay higher rates than those offered to borrowers with fair credit or higher. No matter your credit score, it’s keep to review the lender, rates and terms before getting a short-term loan. Compare the loan terms, pros and cons of our top lender picks to help you make an informed decision for your unique short-term loan needs.

We at the MarketWatch Guides team reviewed dozens of personal loan lenders to assess their interest rates, repayment terms and other loan features. Here are our top picks for the best short-term loans for bad credit.

• Upstart: Our top pick
• Upgrade: Best discounts
• Avant
• Universal Credit
• OneMain Financial: Best for physical locations

Upstart is an online lending platform that uses variables like education level and employment to help give borrowers with poor credit a better chance of qualifying. You can apply for up to $50,000 at competitive interest rates, making it our top choice for borrowers with bad credit.

Pros and Cons of Upstart

Pros

• Minimum credit score of 300 is lower than other lenders.
• Education and employment are used as qualifying factors.
• Applicants with no credit history may still qualify.
• Funding within the next business day

Cons

• Limited repayment terms — choose between three or five years
• Borrowers with low credit may face higher interest rates.
• Some borrowers may face an origination fee.

Why Upstart Stands Out

Upstart has one of the lowest minimum credit score requirements of the lenders we reviewed. It stands out the most because it also has competitive interest rates. Upstart’s lowest advertised interest rate range is lower than other lenders who serve low- or no-credit borrowers.

And unlike many lenders that rely predominantly on the FICO credit score, Upstart looks at additional factors like your education level, employment, income and other data points. Instead of labeling all poor-credit borrowers as high-risk, Upstart obtains additional information to assess an individual applicant’s credit risk. This additional information means you may still qualify for favorable loan terms even if your credit is low, or you’re new to establishing credit.

With Upgrade, applicants with bad or no credit can apply with a co-borrower who may help them qualify for a lower interest rate or increase their loan approval odds (though c-borrowers are also responsible for repaying the loan). The lender also offers multiple rate discounts, including discounts for using autopay and for having payments directly sent to creditors.

Pros and Cons of Upgrade

Pros

• Allows co-borrowers
• Multiple discounts
• Flexible payment due date
• Free credit health tools

Cons

• Charges origination fees up to 9.99%
• May charge fees for late payments and insufficient funds
• Some states may have higher minimum loan amount requirements.

Why Upgrade Stands Out

Borrowers with subpar credit may choose to apply for funds with a co-borrower using a joint loan application. A co-borrower with strong credit and a solid financial history may increase your approval odds or help you qualify for a lower interest rate. Upgrade allows such joint applications, while many lenders do not, making it easier for borrowers with bad credit to qualify.

Offering collateral, like a car, in exchange for a personal loan can result in a lower interest rate. Upgrade is one of the few personal loan lenders to offer secured loans, which can be attractive to borrowers with poor credit who otherwise would not qualify for a lower interest rate. Just make sure the payment fits into your budget — you may lose your collateral if you default on the loan.

Upgrade also offers a suite of tools in its mobile app to help you understand and improve your creditworthiness. Once you sign up, you can view your credit score, a summary of your credit report and customized insights and recommendations. There’s also a credit score simulator to help you see how different decisions can impact your credit.

While Avant typically requires a credit score between 600 and 700, in some cases, Avant may factor in the income of others in the household — not just the applicant’s — to determine eligibility, helping borrowers with poor credit qualify for competitive rates.

Pros and Cons of Avant

Pros

• May include household income, not just individual income, when determining borrower’s eligibility
• Funding disbursed as soon as the next business day
• Prequalify without affecting credit

Cons

• Administrative fee up to 4.75% applies
• Late fees and unpaid payment fees for delayed or failed payments
• Maximum loan amount of $35,000 is lower than some other lenders.

Why Avant Stands Out

According to Avant’s website, most customers approved for an unsecured personal loan have a credit score between 600 and 700. This is different from lenders who promote bad-credit products.

However, some applicants may be able to claim income outside of their primary source. Avant may count the income of others in the household in addition to the applicant’s income. This is also uncommon. Sometimes, a lender may let you apply with a co-borrower or co-signer, but that person would also be responsible for paying back the loan.

Universal Credit is a subsidiary of Upgrade, another of our picks for best short-term loans. You can check your interest rate on its website without affecting your credit score and apply for a personal loan of up to $50,000. Universal Credit offers repayment terms between 36 and 60 months.

Pros and Cons of Universal Credit

Pros

• Funding within one business day
• Free credit monitoring

Cons

• Origination fee up to 9.99%
• May not be able to choose your repayment term
• Lowest advertised rates (11.69% as of this writing) are higher than some other lenders.

Why Universal Credit Stands Out

Universal Credit’s $50,000 maximum loan amount is higher than some other bad-credit lenders, such as OneMain Financial and Avant. This could be ideal if you’re covering a significant expense or consolidating a large amount of credit card debt. Just remember that higher interest on a high loan balance can be more challenging to repay.

Borrowers can also access free credit monitoring to track their credit score. If you’re using a personal loan to improve your credit, keeping tabs on your credit report and score will be critical to your journey.

OneMain Financial is a bank that offers secured and unsecured small loans for up to $20,000. Approval for larger loan amounts may require a secured loan that requires collateral, like your car or motorcycle, in case of a default. Borrowers can choose repayment terms of 24, 36, 48 or 60 months and have access to in-person support at one of OneMain’s local branches.

Pros and Cons of OneMain Financial

Pros

• Local branches for in-person support
• Fast funding — within one business day of approval
• Payment due date can be changed twice.

Cons

• Maximum loan amount of $20,000 is lower than some other lenders
• Origination fees are higher than some other lenders – up to 10%
• Late fees and insufficient funds fees apply
• Not available in Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island, Vermont, Washington D.C., or U.S. territories

Why OneMain Financial Stands Out

OneMain Financial offers secured loans that may come with a lower interest rate than unsecured loans. However, you have to provide valuable collateral for a secured loan to protect the lender from potential default.

Customers can apply for and manage their OneMain Financial personal loan online and can also access a local branch for in-person support.

Short-term loans for bad credit can be helpful for big emergency expenses, like unexpected medical costs or car repairs. Installment loans have fixed rates for the life of the loan, which often makes them more affordable than high- and variable-interest credit cards. Personal loans are also fast and flexible, putting money in your bank account for just about any expense — often within one business day with direct deposit. An affordable short-term loan could even help you build credit if you make your payments on time.

But a bad-credit loan is not for everyone. If you can’t afford the monthly payments that come with a personal loan, it’s best to avoid it altogether. Defaulting on a new loan would only cause more damage to your credit. Before committing to a short-term loan, consider connecting with a low- or no-cost credit counselor if you’re wary that the payments may not fit your budget. A local nonprofit may provide counseling, or you can look online for reputable credit agencies.

Qualifying for a short-term personal loan with bad credit is possible. Take these steps to ensure you’re making an informed decision that can help keep you moving forward financially.

• Check your credit health: Review your credit report and score before applying for a loan to know where you stand and how you compare to lenders’ requirements. You can also check for errors on your credit report and get ahead of them by filing a claim.
• Prequalify with multiple lenders: In most cases, you can see the interest rate and repayment terms with an online lender without impacting your credit score. Prequalification will show you your personal rate, which can be different from the interest rates advertised on the website.
• Calculate monthly loan payments: Once you have a few loan offers, use a personal loan calculator to estimate your monthly payment. If it doesn’t fit your budget, you may want to pass on the loan and seek the help of a low- or no-cost credit counselor.
• Choose the offer that meets your needs and your budget: If you find an affordable offer, you can move forward by submitting a loan application and completing any verification requests. You’re likely to get final approval and your money more quickly if you respond to requests as quickly as possible

The best bad-credit loan should meet your short-term needs without sacrificing your longer-term personal finance goals. Compare loan offers from several lenders and pay attention to interest rates, fees and repayment length. In most cases, you can see what offer you’d qualify for with a soft credit check that won’t impact your credit score.

Here’s how to compare short-term loans for bad credit:

• Review eligibility requirements: Many online lenders will list requirements that applicants must meet to qualify for a loan. This could be a minimum credit score, specific debt-to-income (DTI) ratio or requiring a co-borrower on the loan application. Get an idea of the application process and any documents you’ll need.
• Know the interest rates and fees: Check the annual percentage rate (APR) range on the lender’s website. The APR will include your interest rate and any fees that may come with the loan, like an origination fee. Ideally, you want a lender that offers low or no fees.
• Look for flexible repayment terms: The repayment period impacts your monthly payment. You can spread your payment over a longer repayment term for a lower bill or choose a shorter term to pay it off quickly (and pay the least in interest).
• Pay attention to additional benefits and features: Many lenders have simple online applications and can send the money within one or two business days of approval. You may also have access to features like flexible due dates, 24/7 customer service and rate discounts (like an autopay discount) that can make repayment a lot smoother. These benefits may seem small but can go a long way when you need money fast.

Our team put together a comprehensive 100-point rating system to evaluate personal loan companies based on factors that mean the most to you, the potential borrower. We then gathered scores of data points from across the industry, analyzing disclosures, licensing documents, sample loan agreements, marketing materials and websites for more than two dozen of the most prominent personal loan companies in the United States.

Our rating system takes into account four broad categories. Here’s a brief breakdown of each one.

• Affordability (35%): We gauge how expensive each company’s loans are to pay back, taking into account both interest rates and fees. The highest-scoring lenders will have low minimum and maximum annual percentage rates (APRs) and low or no origination fees.
• Loan features (35%): This category measures the breadth of loan terms available to prospective customers. The most points go to lenders with a wide range of loan lengths, small minimum loans, large maximum loans, and fast funding.
• Customer experience (20%): We review each company’s application, prequalification and customer service policies and procedures to create this category score. The best companies will have simple online applications and multiple ways for customers to get their problems solved.
• Company reputation (10%): Our team analyzes each company’s Better Business Bureau file, customer reviews and any outstanding regulatory actions. The most points will go to companies with an A+ rating with the BBB, a track record of addressing customer complaints and no active regulatory orders.

This rating system is intended to give readers a comprehensive overview of each personal loan company. However, our top-rated lenders may not be the best fit for all borrowers. To learn more, you can read our full personal loans methodology.

Trea S. Branch Contributing Writer

Trea S. Branch is a writer passionate about helping those navigating hard financial situations. She aims to level the playing field financially, often drawn to groups and communities who are overlooked. Trea has a bachelor’s in economics from the University of Michigan and a master’s in business administration from the University of Notre Dame. Her articles have been featured in the Associated Press and several financial publications. She lives in Chicago, Ill., with her husband and two children.

Kelly Larson Senior Editor

Kelly is an editorial leader and collaborator with over 13 years of experience creating and optimizing data-driven, reader-focused digital content. Before joining our team, Kelly was the cross-niche editor and Branded Content Lead at personal finance and fintech site Finder.