There are always expenses that can come up both in the business and personal areas of life. There’s many kinds of loans you can take out to cover unseen expenses when they come up, and places you can turn to get them if you don’t have a credit card with a high credit line or a credit card period. Many lenders check your credit score and have to confirm you have reasonable income in order to issue a credit line or loan of any kind, though in some cases you may be able to take out a secured loan if you have the cash on-hand or an asset you can use as collateral. But usually short-term loans work best if you have limited credit or assets to work with.
How Do Short-Term Loans Work?
It largely depends on who you borrow the short-term loan from, and possibly whether you apply in-person or online. Most short-term bank loans have to be done in-person, though if you’ve been a longtime member of the bank or credit union you may be able to apply completely online and have the funds issued to you quicker that way. Generally speaking you will need to send the lender copies of the following either electronically or in-person to get a short-term loan:
- A government-issued photo ID that shows you’re at least 18
- A document proving your income
- Occasionally a written statement on why you need the loan, and signature indicating you agree to its terms
Most short-term loans last no longer than a year according to Experian, and sometimes you should expect to pay them off within months or even weeks.
Can You Get Short-Term Loans Even With Bad Credit?
Your credit score always follows you around from the time you’ve taken out your first loan or credit card, up to the present day. Sometimes mistakes happen and you end up with a credit score that hurts chances of getting either a short-term or long-term loan. But the good news is there are some banks and alternative lenders out there who do work with low credit or even no credit history individuals such as these ones listed by Nerdwallet. But you’ll also notice they suggest those who have damaged credit scores should still seek to fix them even without emergency cash needs.
Are There Other Short-Term Loan Options Out There?
If you’re having trouble getting a short-term loan from your bank, and you don’t have any friends or family you can turn to for an emergency loan, there are a few options you can still use to manage your emergencies. But be warned these are very risky options that could lead to more damaging effects than good ones if you aren’t careful. If you do have to use these alternative loans, don’t delay to pay them back at all.
Payday loans or installment loans are loans that accept just about anyone regardless of credit and in some cases even accept people with no checking accounts. They’ll usually lend a couple hundred dollars or a little more that has to be repaid within a couple weeks, and they’re referred to as payday loans since they assume the borrowers next paycheck will cover them. But they’re risky because the interest rates are often very high, sometimes even as much as 1,000% APR. The interest rates and fees start instantly, so you should only use these loans if you can pay them back within days.
An auto title loan is another short-term loan that’s also very risky and has very high interest rates, although on average you can find rates a bit lower than payday loans. You also usually have a little more time to pay them back with sometimes a month or two to do it. But these loans give the lender the title to your car, so if you default on them you could risk your car getting repossessed, and if it doesn’t cover the loan costs, you could be on the hook for the difference. The bottom line is weigh your other options carefully before deciding to use alternative short-term loans.