Short-Term Personal Loans

A short-term personal loan is an unsecured loan that provides a lump-sum payout. Once you receive the payout, you repay the loan in fixed monthly installments for a period determined by the lender.

While borrowers can repay long-term personal loans over 12 to 60 months, term lengths for short-term personal loans are typically between 12 to 36 months. These shorter terms give you the opportunity to pay off your debt more quickly and with less interest overall.

How do you get a short-term personal loan?

Short-term personal loans are available through banks, credit unions and online lenders. The application process is straightforward, and borrowers can usually apply online. However, the exact requirements may differ from lender to lender, so research the specific requirements with your preferred lender before applying.

Qualifying

Lenders consider factors like the applicant's creditworthiness and income when deciding whether to approve them for a short-term personal loan. Since personal loans are unsecured the lender may rely on good credit to indicate responsible borrowing habits and on-time payments.

Application

Lenders may also accept online applications for short-term personal loans. You may need to provide personal identification and proof of income, such as pay stubs or tax returns. The lender will perform a hard credit inquiry into your credit file, which could temporarily affect your credit. Most lenders process personal loan applications quickly, so if you're approved the same day, you could receive the funds in a day or two.

Repayment

You can repay a personal loan in fixed monthly installments. Your interest rate remains unchanged throughout the loan term. As long as you don't default or make a late payment your monthly payment should remain unchanged.

Note that lenders may not allow you to extend your loan term once you've borrowed, so it's important to understand what monthly payments you can afford and budget around them.

Advantages of short-term personal loans

Short-term personal loans have some advantages, such as:

Flexibility

You can use the lump-sum deposit from a short-term personal loan for almost any expense: renovating your home, paying for car repairs or even consolidating debt.

Fixed Repayment

Since personal loan installments remain the same month to month, a short-term personal loan's predictability can help you factor your monthly payments into a budget plan.

When should I consider using short-term personal loans?

Short-term personal loans make more sense in some contexts than in others, such as:

• Large, one-time expenses: If you're repairing a car, renovating your home, or moving to a new city, the convenience of a fixed interest rate and monthly repayment plan may make short-term personal loans a choice worth considering.
• Debt consolidation: You can use a short-term personal loan to consolidate debt, especially when you can find a lower interest rate than the average interest rate of your current debts.

Alternatives to short-term personal loans

If short-term personal loans don't seem like the right choice, there may be other options:

• Personal line of credit (PLOC): A personal line of credit gives you access to revolving credit in the same way as a credit card. But unlike a credit card, your credit account lasts for a limited time. A PLOC allows you to withdraw funds as needed, but your interest rate will be variable and subject to change with market fluctuations.
• Credit cards: Credit cards are convenient for daily expenses and may even help you access additional rewards, miles or discounts. However, they may also carry relatively higher interest rates and additional fees that make them a less favorable option for large purchases.
• Long-term personal loans: With a longer-term personal loan, you may be able to opt for lower monthly payments over an extended repayment period.

Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.