Types of Short Term Loans – A Quick Overview to Help You Make the Right Decision

Short term loans offer temporary financial solutions that enable the borrower to solve emergency situations. “Short term” in the case of these loans means a loan term up to 90 days in length, by which the borrower is required to pay back not only the borrowed amount, but also the fees and interests that are added to the principal debt.

These short term loans can take various forms, but they all have a few features in common:

  • the terms of eligibility are relatively easy to meet;
  • money becomes available right away or by the following day at the latest;
  • they are all relatively expensive;
  • they are all unsecured loans, which means that the borrower does not need to offer collateral to guarantee the debt (there are loans, called bridging loans that offer short-term financial help to finance or refinance a property asset and these are evidently secured against the property occupied or to be occupied by the borrower, but here we would like to talk only about cash loans to be used in emergency situations).

Besides these features, the various forms of loans come with a lot of specific features and conditions, so in what follows we propose to describe the most common types to make the choice easier for you.


This is a financial service available at several banks across the U.S. It means that the agreement between you and your bank allows you to withdraw more many from your account than it actually contains. If your agreement allows you to overdraw your bank account, it will probably have a clause that determines the overdraft limit as well as the interest rate to be charged on the overdrawn sum.

Payday Loans

Perhaps the most popular form of short term loans, payday loans allow the borrower easy access to relatively small sums of money, usually up to $1,500, with a short repayment deadline, with most lenders not more than 90 days. The sums available through these short term loans being restricted and accompanied by high fees and interest rates, this type of loan is suitable only if the borrower is absolutely sure that the repayment of the sum will be done by the pre-defined deadline, without any delays that may involve even more fees.

Credit Cards

Credit cards come with a line of credit accompanying them that allows the holder of the card to use the sums available to them as credit to pay for goods and services. The money used up by the holder is considered to be a short term loan because the repayment will normally happen when the credit card is topped up next, that is, when there is money transferred into the card holder’s account.

Short-term loans can be the right solution for you if you need cash quickly and you can be sure you can pay it back by the deadline – we recommend you to examine your financial situation prior to applying for any quick loan, because only by acting in a cautious manner is it possible to regain your financial stability.