• Thu. Dec 1st, 2022

What you should know about flex loans and how they work

ByCindy J. Daddario

Feb 2, 2022

Our goal here at Credible Operations, Inc., NMLS number 1681276, hereinafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote products from our partner lenders that reward us for our services, all opinions are our own.

Flex loans are convenient but can be expensive. (Shutterstock)

If you’ve ever needed instant access to Cash to cover an immediate financial emergency, you may have wondered what kind of loan could help you. Flex loans are easy to secure even if you have bad credit. Unfortunately, they usually come with very high interest costs, regardless of the length or amount of the loan.

Let’s take an in-depth look at how flex loans work, their pros and cons, and how they compare to alternative fast cash solutions like a personal loan from an online lender.

What is a flex loan?

A flex loan is not like a regular personal loan — in fact, it is not a loan at all. Flex loans are unsecured personal lines of credit that work similar to a credit card. But they are usually more expensive than credit cards.

Flex loans offer two key benefits: if you have bad or limited credit, you can usually secure a flex loan and get money right away. You can consider a flex loan if needed Coverage of an emergency expense and are unable to get a private loan.

Flex loans typically come from cash advance institutions and online lenders. Some banks and credit unions may offer flex loans, but remember they may refer to a personal loan as a “flex loan.” Personal loans are not lines of credit.

How do flex loans work?

When you take out a flex loan, the lender grants you access to a line of credit. You draw on this credit as needed and make a payment each month until you settle the balance. You can choose to pay just the minimum, pay extra, or pay the full amount each month. Flex lenders only charge interest on the amount you borrow and the balance you have month-to-month.

While lenders may not charge additional fees – such as other short-term loans.

What can you use a flex loan for?

Flex loans, like personal loans, can be used for any purpose. But many borrowers use smaller flex loans to bridge the gap when they have high monthly bills, unexpected car repairs, or medical bills that are due between paychecks.

Because of their very high APR, flex loans should really only be an option if you can’t cover emergency costs in a cheaper way.

How Much Can You Borrow With a Flex Loan?

All loan amounts and terms are unique to your chosen lender. In general, however, Flex loans can be available for as little as $100 to several thousand dollars.

Similar to credit cards and personal loans, borrower approval depends on a number of factors. Some lenders may require proof of citizenship, employment, bank account and that you are 18 years of age or older.

How much do flex loans cost?

Flex loans typically come with very high interest rates and fees that can add up to an APR of 200% or more. In contrast, APRs on credit cards and personal loans are typically in the double digits, even for borrowers with poor credit ratings. Because the APR includes both the interest rate and the fees associated with the loan, it is a better indicator of the true cost of a loan product.

The total cost of flex loans depends on the loan amount, the interest rate and the repayment period. As with any type of revolving loan, if you only make the minimum payment each month, it may take longer to repay the loan.

Before you take out a flex loan, be sure to check personal loan rates. Some lenders offer loans to those with less than perfect credit, and online lenders can often provide next-business-day financing.

Flex loans vs. credit cards

Although both are revolving lines of credit, credit cards have some advantages over flex loans. A credit card can a higher maximum loan amount as a flex loan. And while credit card interest rates are typically higher than personal loan interest rates, they’re still significantly lower than the typical APR for flex loans. But it can be difficult to qualify for a credit card if you have a bad or low credit history.

Flex loan vs payday loan

Payday loans are short-term, high-interest loans that are due for repayment on the borrower’s next payday. APR for payday loan can be 390% or more, according to the Consumer Financial Protection Bureau. This is significantly higher than the typical APR for flex loans. For both payday and flex loans, the lender charges fees that can be high if you are late paying.

Pros and cons of flex loans

All financial products have advantages and disadvantages. It’s important to weigh the pros and cons before committing to a flex loan.


  • Qualifying for a flex loan is generally easy, and most borrowers can secure a loan, even with a poor or limited credit history.
  • Loan approval is usually quick and funds release is just as quick.
  • Unlike a classic loan, you can continue to access your credit line after the initial withdrawal. This gives you access to more money in an emergency.


  • High APRs make flex loans a very expensive form of credit.
  • Paying just the minimum each month can add up interest and fees, leaving you in expensive debt that may be difficult to pay off.
  • Access to an open unsecured line of credit could tempt you to overspend.

Alternatives to flex loans

Flex loans aren’t the only option if you need money fast and you have a bad credit history. Before you decide on an expensive loan product, consider these alternatives:

  • Bad Credit Personal Loans — Bad credit personal loans are fixed-rate loans designed for borrowers with lower credit ratings. While bad credit can earn you a higher interest rate than good credit, a bad credit personal loan typically has a much lower APR than a credit card or flex loan.
  • Auto Repair Loans — These loans are used to cover car repairs and are distributed in one lump sum. No collateral is required for these unsecured loans. Borrowers who need to cover repair costs while waiting for insurance claims might prefer this to a flex loan.
  • construction loans — Credit builder loans are designed to help borrowers with bad or no credit histories to responsibly build credit. However, instead of getting the money up front, you get the loan payout after making a certain number of payments. construction loans are often paid off at the end of the loan term, so they may not be a good option if you need money immediately to cover an unexpected expense.
  • Short Term Loans – Short-term loans require little to no collateral and have shorter repayment periods. Although they require a credit check, lower APRs and faster repayment times offer borrowers a responsible way to secure funds and get out of debt quickly.
  • Peer to Peer Lending — Internet peer-to-peer lending is an unconventional way to borrow money directly from independent lenders or investors. Although loan sites set different interest rates and terms, some borrowers can benefit from competitive interest rates and low fees.