The best loan apps of May 2024 for small-amount borrowing (2024)

If you’re short on cash before your next payday, a loan app might be a helpful solution. These mobile apps offer short-term loans that are easier to obtain and more convenient to repay than personal loans — and generally safer than more predatory payday loans.
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Loan apps may be particularly helpful if you have less-than-stellar credit (most lenders won’t check your credit) or recurring direct deposits (they generally work by grabbing repayment from your bank account). Just be mindful that some loan apps charge fees that can easily equate to triple-digit APRs (more below) if you don’t repay the debt.
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We’ve rounded up a list of the eight best loan apps of 2024 after analyzing and comparing loan amounts, funding timelines, fees, repayment terms and many other factors. This list can help you narrow down the best loan app for your situation.

Why use a loan app?

• Access money quickly in an emergency. A loan app may be faster and more affordable than a personal loan, especially if you only need a small amount. Just keep in mind that even some of the best loan apps charge “express” or “instant” funding fees.
• Avoid overdraft fees. A loan app can help you avoid the penalties you might accrue for outspending your bank account balance. Though loan apps also charge fees, they’re often lower than those you’d pay your bank for an overdraft.
• Get a paycheck advance. A loan app can serve as a cash advance when you’re running low on money and need help making it to payday. Some lenders allow you to tap a portion or all of your paycheck before it arrives — assuming you’ll agree to repay the loan when it does.
• Avoid riskier short-term loans. Loan apps are a more affordable and less predatory alternative to payday loans. They accomplish the same goal of getting you money quickly when needed, but they don’t charge the same predatory interest rates and fees.
• Access other financial tools. Some loan apps offer other financial tools, including credit monitoring, deposit accounts, budgeting features and more. You can prioritize the lenders that offer the perks you most desire.

What are loan apps, and how do they work?

Loan apps, also known as cash advance apps, describe fintech companies that offer short-term, small-dollar loans — usually up to $500 — in exchange for interest or flat fees.

“These apps are designed to provide short-term financial relief, often bridging the gap until the user’s next paycheck,” said Jason B. Ball, an Oregon-based certified financial planner.

These typically online companies often advertise themselves as payday loan alternatives, cash advances, overdraft protection or something else. But no matter the terminology they use, they all work similarly.

Loan apps generally require you to connect your bank account (or open one of their checking or savings accounts). This is how you’ll initially receive money from the app, but also how your loan will be automatically repaid. You’re generally required to repay your loan after a certain number of days, weeks or when you get your next paycheck (or other direct deposit).

Example: Let’s say you’re still a week from your next paycheck, but your car breaks down and requires an immediate, substantial fix (perhaps you need it to get to work). Assuming you meet a loan app’s eligibility requirements (particularly around direct deposit), you can qualify quickly and have the money deposited into your account on the same day.

A week later, when your paycheck hits your bank account, the loan app will see the money come in and automatically withdraw the amount you borrowed plus any fees. (If you didn’t need your wheels fixed quickly — or if the repair estimate was beyond a loan app’s loan limit — you might also examine auto repair loans.)

Are loan apps safe?

Loan apps have security measures in place to keep your money safe, but that doesn’t mean they’re risk-free. These apps generally require you to connect your bank account (or open one of theirs). Additionally, they may require personal information, including your Social Security number.

If you don’t practice strong digital safety habits, like choosing a strong password and using two-factor authentication, you risk someone accessing your account and your money and/or financial information.

It’s also worth considering whether borrowing money is a safe choice for your personal finances. Even if the app itself doesn’t pose a risk, going further into debt could damage your financial health, especially if you’re in a cycle of borrowing to make ends meet.

Loan and cash advance apps can be a valuable tool when you’re still days or weeks away from your next payday but need money quickly. These loans can be deposited into your bank account within hours, in some cases. And if you’re at risk of overdrafting your bank account, you’ll find that the fees on these loans are cheaper.

Additionally, loan apps usually don’t run a credit check, meaning bad credit won’t be a hurdle to qualifying. Finally, many loan apps have other features, including credit monitoring, educational resources and bank accounts.

Related >> How to get a loan with bad credit

While these loans have relatively low fees, when you calculate them as a percentage, they actually have quite high APRs, similar to payday loans.

“Because of the exorbitant rates, these are essentially app-accessible payday loans,” said New Jersey-based certified public accountant Andrew Gosselin. “If you depend on cash advances on a regular basis, it’s simple to fall into a debt cycle. I suggest saving these apps for actual emergencies exclusively.”

Additionally, these loans tend to have low maximum loan amounts and short payment terms, meaning they aren’t a good long-term solution, especially if you need a lot of money.

Payments are generally withdrawn directly from your bank account, forcing you to prioritize these loan payments over other financial responsibilities. Finally, because of the short repayment terms, you may need to take out another loan to cover the first one, leading to an endless cycle of borrowing.

The bottom line: The best loan apps can be a helpful bridge to get you to payday — once in a while. But if you find yourself relying on them to make ends meet, take a closer look at your budget to identify a less expensive strategy.

How to choose the best loan app

There are plenty of loan apps to choose from, and it’s important to find the one that best fits your situation. Consider these steps to get started:

• Determine how much you need to borrow. Because each loan app has its own maximum loan amount, that information alone could narrow down your search.
• Pay attention to loan costs. Some loan apps offer fee-free loans, while others don’t. Those that charge fees may have other features that make those fees worth it, but you’ll have to decide for yourself. “Be aware of flat fees, express fees and optional tips, which can affect the overall cost,” said Ball.

Tip: To accurately compare the costs of loan apps, you can calculate their APRs using this formula: APR = (Fees / Loan amount / Days in loan term) x 365 days x 100. For example, if you borrow $500 on a 14-day term and are charged $25 in fees, your APR would be over 130% — that’s extremely high compared to personal loans and credit cards that can have APRs well below 36%.

• Consider the repayment term each loan app requires. Most loan apps require that you repay your loan when you get your next paycheck. If you need more time to repay your loan, consider a lender with longer repayment terms.
• Read reviews from current and past customers. These reviews can give you insight into how a lender treats its borrowers, from customer support to transparency, helping you to further narrow down your decision.

5 alternatives to loan apps for quick cash

Loan apps can be a good option if you’re in a financial emergency and don’t have access to other options, but they aren’t right for everyone.

“Better alternatives include asking your bank for an overdraft line of credit, taking out a small personal loan from a credit union, putting emergency expenses on a credit card or asking trusted friends, family for a no-interest loan,” said Gosselin.

1. Small personal loans

Best for: When you have good credit

If you need a larger sum of money or need more than mere weeks to repay it, consider a small personal loan. These loans are an especially good alternative for borrowers with good credit (or a creditworthy co-applicant) who may qualify for a low personal loan interest rate and no origination fees. You can pay your loan off over months or years instead of weeks, which will help lower your payments and leave room in your budget for other priorities.

2. Credit union loans

Best for: When you’re already a credit union member

Credit unions can be an excellent source of small, low-interest loans — federal credit unions cap their interest rates at 18%, but you might see 36% rate ceilings from some banks and online lenders. Also, credit requirements at credit unions tend to be more relaxed than they are at banks. However, credit unions require membership. If you already have a membership at your local credit union, consider speaking with a loan officer about your options.

3. Credit cards

Best for: When you can repay the debt by the end of your statement period

Credit cards only charge interest if you don’t repay your full balance by the due date. Considering loan apps require you to pay them back within just a few weeks, the best credit cards could offer just as much breathing room, while also having no loan fees and the potential to earn rewards (particularly if you have a cash back credit card).

Related >> How to get cash from a credit card

4. Buy now, pay later apps

Best for: When you’re making a big retail purchase

Plenty of online retailers allow you to check out with a buy now, pay later app. These apps spread your purchase into four installments paid over six weeks so you don’t have to pay the full amount at once. These apps generally don’t charge interest if you repay the full amount within the normal payment term.

5. Friend or family loans

Best for: When you have a loved one with the ability or willingness to help

Though not everyone has the privilege of having friends or family with the means to provide financial help, consider this option if it’s available to you. You can avoid paying interest and some of the pressure of such a short repayment term. Just be sure you have a repayment plan in place (and stick to it) to avoid damaging your personal relationship.

Methodology

To determine the best loan apps of 2024, CNN Underscored Money editors judged 15 widely available lenders across four categories of loan features. Research analysts then scored these financial institutions to create an out-of-five rating.

Cost of borrowing (35%)

This is the category of fees. We rewarded lenders for having no or low fees and transparency about what’s charged and when. Common fees under consideration include those for subscription or membership, express funding, overdrafts and late payments.

Loan details (30%)

Here, we reviewed the nuts and bolts of each loan app’s product. The list of criteria included time to funding (with and without fees), minimum and maximum loan amounts and repayment terms. Lenders scored highest for delivering small and large loans quickly and offering longer-than-average repayment schedules.

Eligibility (10%)

Though credit scores and history aren’t usually a requirement to borrow from loan apps, there are other eligibility criteria, such as maintaining direct deposits. We evaluated competing companies on their nationwide availability and whether employer participation is required, among other factors.

Repayment experience (25%)

Even for small-dollar loans, a safety net is important. That’s why we probed loan apps to learn about their hardship options, grace periods and credit reporting. We also considered the ratings, reviews and availability of their mobile apps and customer service.

What didn’t make the cut

Many loan apps that you might see elsewhere online failed to measure up. Here are examples of lenders that didn’t make our list.

• Albert and Empower Finance have limited loan amounts.
• CashApp may check your credit before approval.
• Current has multiple fees that are either high or lacking transparency.
• Even requires employer participation.
• Klover’s express funding fees are twice that of our top-rated loan app company.
• MoneyLion’s Better Business Bureau profile contains red flags, including an “F” rating.

Frequently asked questions (FAQs)