Short-Term Loans: Types, Costs and How to Choose

Updated November 1, 2026

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Quick answer: Short-term loans are loans repaid within weeks or months. The lowest-cost options are usually credit union PALs and small personal loans. Payday, car title and pawn loans are fast but can carry very high APRs and, for title loans, the risk of losing your car.

The type of loan matters more than the lender's name. Here is how the main options compare.

Types of short-term loans

Type	Typical term	Main risk
Credit union PAL	1 to 12 months	Membership needed
Small personal installment loan	3 to 60 months	High APR if your credit is weak
Payday loan	Often about 2 weeks	Very high cost; repeat borrowing
Car title loan	Often 15 to 30 days	You can lose your vehicle
Pawn loan	Often 30 days or more	You lose the item if you don't repay
Buy now, pay later	Weeks to months	Late fees; easy to stack plans

Payday loan cost in plain numbers

The CFPB notes that a typical two-week payday loan with a $15 fee per $100 borrowed works out to an APR of almost 400%. Spread over a year, that same fee rate costs far more than a credit card or a credit union loan.

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Before you borrow

Check whether you can delay the bill, set up a payment plan, or get help from a nonprofit credit counselor.
Compare at least two offers by APR and total repaid.
Confirm the lender is licensed in your state.
If you are on active duty or a covered dependent, the Military Lending Act caps most consumer loans at a 36% Military APR.

This guide is general information, not financial advice. Loan rules, rate caps and which products are allowed differ by state. Check a lender's license with your state regulator before you apply.

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Frequently asked questions

What is the fastest short-term loan?

Payday, title and many online loans can fund the same or next business day, but speed usually comes with a higher cost. Some credit unions fund PALs quickly too.