What Is a Flex Loan?

Flex loans are the get-rich-quick scheme of the lending industry. A flex loan can get you quick access to cash but proceed with caution — high APR rates can leave you further in the hole.  A flex loan works similarly to a credit card. Your lender will give you a credit limit and you can borrow as much as you need up to that amount. Flexible loans are often available without a credit check and to borrowers with poor credit.

Many lenders charge daily or weekly fees that can drive the effective APR for these loans well above 200% — making flex loans extremely expensive. Borrowers often get trapped, making minimum payments that barely cover the fees and interest. Since the loan has no set term, the payments could go on for many years.

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In this article

    What is a flex loan?

    A flex loan is an unsecured line of credit that gives you access to cash, up to a pre-approved limit, similar to a line of credit or a credit card. The flexible loan lets you take out less than the limit if you don’t need the full amount. You’ll pay interest only on what you currently owe, and you can borrow more at any time as long as you stay below your limit.

    People usually take out flex loans for emergencies like home and auto repairs or meeting monthly bills. Some people take out flex loans to cover medical expenses or to consolidate other high-interest debt.

    The interest rates and fees for these loans tend to be very high because they’re offered to high-risk borrowers. Lenders often charge the maximum allowed by law each state for flex loans.

    Your payments will vary depending on how much you’ve borrowed. A monthly statement keeps you informed of how much you’ve borrowed and what your monthly payment is. If you make only the minimum payment, it could take many years to pay off the balance.

    The lenders who offer flex loans are often the companies that make payday and title loans. These lenders are notorious for trapping consumers in a cycle of escalating debt.

    Pros of a flex loan

    Flex loans are appealing to poor credit borrowers who want a fast and easy solution.

    • Some flex loans have no credit check (or poor credit OK)
    • Easy application process
    • Fast approval
    • Easy access to cash
    • Flexible payment terms
    • Ability to borrow more, until you reach your limit
    • Can take out less than the full amount

    Cons of a flex loan

    Flex loans have several disadvantages, including:

    • Extremely high interest (triple-digit APRs in some states)
    • Lengthy repayment terms, with no definite end date
    • High fees
    • Risk of accumulating high debt as interest mounts
    • Minimum payments may barely cover interest and fees
    • Borrowers can get trapped in a never-ending debt cycle

    When to use a flex loan

    There are emergencies where you may feel it’s necessary to take out a flex loan. For instance, if you have poor credit and know that you’re going to need help covering your living expenses in the next few months — but you’re not sure exactly how much cash you’ll need  — you might turn to a flex lender. It’s typically best in situations when you need a flexible borrowing allotment for immediate withdrawal and for borrowers with low credit who can’t find loans elsewhere.

    In this scenario, you would gain peace of mind by knowing how much you’re approved for, but you could take out only as much funding as you need.

    When not to use a flex loan

    Don’t use a flex loan if you have access to a lower-cost personal loan or a personal line of credit from a bank or credit union.

    You’d be wise to avoid these expensive loans for discretionary expenses like vacations or home improvements. Instead, postpone those expenses until you can save the money you need or clean up your credit score so you can access more affordable financing.

    Because of the high rate of interest, these loans aren’t a good option for consolidating debt.

    If you have a low credit score and you need to borrow, there may be better bad credit loans available to you.

    Flex loan eligibility requirements

    Some flex loans have no credit check at all. Others will run a check but usually accept low credit scores. In those cases, your credit score may impact the rate you’re offered.

    Most flex lenders will want you to have some regular source of income and a bank account in good standing.

    You’ll also need to be a US citizen or permanent resident and a legal adult. In most states, ages 18 and older can apply.

    You’ll also need to provide a permanent address, a working phone number, and a valid driver’s license or state ID.

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    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

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    How to apply for a flex loan

    Flex lending is offered by online lenders as well as payday loan and cash advance locations. Some of the lenders who provide this type of loan include:

    • Advance Financial
    • Check Into Cash
    • Cash Express
    • Capital Payday Loan

    Flex lenders will usually offer loans from a few hundred dollars up to $4,000. Since these loans are flexible and renewable, there is no set term length.

    Your state limits rates for flex loans, but it’s the fees that drive up the APR. For instance, according to the Tennessee Department of Financial Institutions, the maximum interest rate in that state for a flex loan is 24%. However, the law also allows for a fee of up to 0.7% per day. That fee could add up to a 255.50% APR over a year. When added to the 24% base rate, the total APR would be a whopping 279.50% annually.

    To apply, you’ll need to fill out an application online or in-person and provide your social security number, income, checking account details, and contact information.

    If you already have too many inquires on your credit report, look for a loan flex review process that doesn’t have a hard credit pull.

    The lender will ask you to submit some kind of official identification, such as a driver’s license or state ID. Some lenders ask only for your verbal confirmation of income, but most will want to see paycheck stubs.

    Approval is sometimes instant, and you can sign the loan documents on the spot. Your funds could be in your bank account by the next business day.


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    Lauren Haas

    Contributing Writer

    Lauren Haas is a freelance writer who covers personal finance, health, and business topics. She’s a serial entrepreneur who enjoys travel, dance, and yoga.

    Reviewed by

    • Danika Miller
      Danika Miller

      Danika Miller is a writer at The Simple Dollar. Her work can be found on Reviews.com, Freshome.com, Her Campus, and Jeopardy Magazine. She holds a bachelor’s degree in creative and technical writing from Western Washington University.