Personal Loans

What are Flex Loans and How Do They Work

What are Flex Loans and How Do They Work

At a Glance

If you need to borrow money quickly or have poor credit, a flex loan can be an option. Functioning as a line of credit rather than a traditional loan, flex loans have more flexibility with the application, borrowing, and repayment process. The downside is that taking out a flex loan can be expensive, and it can also be risky. It’s important to understand what a flex loan is and how to responsibly use one before applying.

In this article, you’ll learn:

What are flex loans?

Flex loans are an unsecured open line of credit, making them more flexible than other types of traditional loans. If your application for a flex loan is approved, you’re able to withdraw cash at any time (up to your approved credit limit). Depending on the lender and how much you got approved to borrow, these amounts could be a few hundred or a few thousand dollars.

Flex loans are also flexible because the funds can be used for just about anything you need, such as home improvements, car repairs, medical bills, or other large purchases.

Because flex loans are unsecured, meaning you don’t need any kind of collateral to secure the loan, and they don’t always require a credit check, they can make good options for borrowers with poor or no credit. However, as with other types of loans, the higher the risk of lending you the money, the higher your interest rate will be.

How does a flex loan work?

Like a credit card, flex loans have a credit limit. You can borrow up to that credit limit at any time, and you’ll only be charged interest for the amounts you borrow and any balance you carry. You’ll then get a monthly statement and must make at least a minimum payment each month, though you can choose to pay extra or pay in full each month. You may also be charged regular fees for using the loan.

What can you use a flex loan for?

Like traditional personal loans, you can use flex loans for just about anything. Smaller flex loans can be used for things like monthly bills, car repairs, or medical bills while larger flex loans can fund home improvements, a vacation or a large event, or other large purchases.

Keep in mind that because flex loans have a significantly higher APR than personal loans, they should be carefully considered, and you should only borrow what you need.

Pros and cons of flex loans

Pros Cons
  • Only pay interest on the amount you borrow.
  • High interest rates, even for borrowers with good credit.
  • An option for borrowers with poor or no credit.
  • Interest charges can add up fast.
  • Can borrow any amount up to the credit limit.
  • Only making minimum payments can lead to a debt spiral.
  • Loan approval and release of funds is faster.
  • No start and end date and flexible borrowing can lead to excessive debt.
  • Flexible payment terms.

Difference between flex loans and personal loans

There are some similarities between flex loans and personal loans, including:

  • Offered by both banks and credit unions.
  • Rates, fees, repayment terms depend on factors such as your credit score.
  • Both can be unsecured.
  • Good credit can help borrowers get more favorable terms and interest.

On the other hand, there are also several differences:

Flex Loans Personal Loans
Loan funds Withdraw cash at any time up to your approved limit. Receive loan funds in one lump-sum deposited into your bank account.
Repayment Must make at least a minimum monthly payment, but don’t have to repay everything you borrow each month. Must make a fixed monthly payment each month.
Interest Only charge interest on the amount you borrow. Charged interest on the full principal balance of the loan.
Lender Cash advance establishments, online lenders, some banks or credit unions Banks, credit unions, online lenders
Loan amount Can be as little as $100 to several thousand dollars. $1,000 to $100,000 depending on the lender.

Flex loan alternatives

1. Bad credit personal loans

If you’re considering a flex loan because you have poor or no credit, there are other options for you. For example, bad credit personal loans are personal loans designed for borrowers with lower credit scores. These fixed-rate loans have a higher interest rate than if you had great credit, the rate is usually lower than a credit card or flex loan.

Learn more: Personal loans for bad credit

2. Auto repair loans

If you need funds or a loan to cover car repairs, you can try an auto repair loan. These loans are unsecure, meaning you don’t need collateral to qualify, and are dispersed in a lump sum you can use to pay for repairs.

3. Credit-builder loans

If you have poor or no credit, you may want to consider a credit-builder loan. These loans are specifically designed for borrowers who need help with their credit to help them build credit in a responsible way. There are ways you can improve your credit with a personal loan, but credit-builder loans are slightly different. These loans typically pay out at the end of a loan term or after you’ve made a certain number of payments. While this isn’t helpful if you need funds quickly for an urgent expense, it can be beneficial if you’re just looking to build credit.

Related: How to improve credit with a personal loan

4. Short-term loans

Short-term loans are also unsecured and don’t require collateral, but they have shorter repayment terms, so you’ll have to repay the loans faster. These loans do require a credit check but typically have lower APRs. Plus, the faster repayment term gives borrowers the opportunity to get funds fast while also paying them off fast, keeping them out of long-term debt.

5. Peer-to-peer lending

Peer-to-peer lending is an alternative type of way to get loan funding. With no financial institution involved, lending platforms connect both lenders and borrowers to facilitate loan transactions. Sign up for the lending platform, fill out an application, and if approved, you’ll be presented with an interest rate and loan terms. Lenders can then review your loan request and decide whether they want to fund it. If they choose to do so, you’ll receive the funds and start repaying the loan.

Learn more: What is peer-to-peer lending

6. Credit cards

Credit cards are another form of revolving credit you can withdraw from, and you only owe as much as you borrow each month. You also only pay interest on the outstanding balance you have each month. Credit card APR can be very high, so you’ll want to avoid carrying a balance and try to pay off the card in full each month.

Consider a 0% APR introductory card, which has 0% APR on the card’s balance for a certain period. This means you can carry a balance on the card without being charged interest, which can make it an option for large purchases. However, make sure you pay off the balance before the intro period is up or risk facing high APR charges.


Yes, you can typically get a flex loan even if you have poor credit because these lenders usually don’t require a credit check. Instead, you must be a U.S. citizen who is 18 years old or older, show proof of employment, and have a bank account.

Flex loan amounts vary depending on the lender but can range from as little as $100 to as much as a few thousand dollars.

Most lenders don’t check your credit when you apply for a flex loan, so doing so won’t hurt your credit. However, if you make late or miss payments, the lender may report this to the credit bureaus and that can decrease your score significantly.

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