Flex Loans: What They Are and Should You Get One?

Key takeaways

A flex loan is a revolving credit product that lets you draw funds as needed up to a limit, and it typically carries a high, often variable APR.
Flex loans often require little to no credit check, but that convenience comes with costlier terms and a balance that can be harder to pay off.
Comparing a flex loan with a personal loan through Upstart may help you find more predictable terms.

A flex loan is a revolving line of credit, not an installment loan. Flex loans are often issued by banks, retailers, or specialized lenders.

With a flex loan, you can draw funds as often as you need, up to a set limit, and interest applies only to the part of the limit that you use. APRs are often high on flex loans, and the money you borrow may have either a fixed or a variable interest rate. The actual costs and terms of a flex loan depend on a few factors, including your credit history, income, and more.

What is a flex loan?

A flex loan is a revolving credit product that works more like a credit card than an installment loan. You can find flex loan products issued by banks, credit unions, retailers, and non-bank lenders.

Your flex loan will come with an approved credit limit, and you can draw funds as needed up to that limit. Interest only applies to the portion of your credit limit that you use, and your borrowing limit becomes available again as you pay down the outstanding balance. The structure of a flex loan is flexible, hence the name.

The three types of flex loans

While the term “flex loan” generally refers to a revolving credit product, as discussed in the previous section, it can also refer to several other products. Here are three rather different loan products that you might see labeled as flex loans.

Revolving credit lines

Banks and credit unions offer these, and they are exactly what we described in the previous section. These products have APRs that often range from the high teens up into the 30s, and are often tied to a checking account. Credit checks are typically less strict, and funding is usually fast once approved.

Installment-style “flex loans”

Online lenders often have loans structured as fixed payments over a fixed repayment term, which they refer to as flex loans. APRs for these loans can be extremely high (sometimes in the triple digits). They’re called flex loans in the sense that they can be used to cover a variety of expenses, but are very different from revolving credit lines.

Retailer or credit card flex loans

Sometimes retailers or credit card issuers offer to convert part of a card balance into a fixed repayment plan. These often have no additional credit pull, since one was already done to open the account. In these cases, no new money is lent. It’s simply a new payment structure being applied to an existing balance.

Will you qualify for a flex loan?

Qualification standards for a flex loan are usually lower than those for other loan products. Depending on which type of flex loan you’re considering, the criteria usually involve having an active checking account, a certain amount of verifiable income, and a credit check, although not all flex loans require all of these.

Issuers of flex loans also typically look at these factors:

Bank account: An active checking account, regular deposits, and a history of maintaining a positive balance.
State of residence: Lending rules vary by state, especially regarding caps on the interest rates that can be charged.
Other debts: Lenders typically evaluate your other debts, especially how much of your other revolving credit you are already using.

Generally speaking, the lower the bar to qualify for a flex loan, the higher the APR you should expect to pay. Borrowers with limited credit sometimes turn to a flex loan, even though that convenience comes at a higher cost. It can be worth comparing flex loans with loans for bad credit through Upstart.

How to apply for a flex loan: step by step

Confirm the issuer type: Know whether you’re applying for a flex loan through a bank, retailer, or other type of lender. As mentioned earlier, the structure and cost of the loan can differ by the type.
Check your state-specific APR cap: Rates vary from state to state, as do disclosure rules.
Gather your income and bank documentation: Most lenders require both, and it can save time to gather this information in advance.
Apply for the loan: Submit your application and complete a credit check, if required. Some lenders require a soft credit check, while others perform a hard credit pull. Some require no credit check at all.
Review your terms: Before you withdraw any money, be sure you know your credit limit, APR, and how your minimum payments will work.
Plan your payoff: It’s a smart idea to have a payoff plan in place before using any money from a flex loan.

Flex loan vs. personal loan: key differences

There are three major differences between (most) flex loans and unsecured personal loans.

Structure: Flex loans are typically open-ended revolving credit lines. In contrast, personal loans are fixed installment loans with a set payoff date.
Underwriting: Flex loans typically require minimal review. Personal loans generally involve a more comprehensive review of factors such as income and employment, and some lenders consider other factors, such as education.
Interest rates: Flex loans typically have variable APRs that apply only to the amount you borrow. Personal loans almost always have fixed interest rates, and therefore have monthly payments that remain steady for the entire repayment term.

One caveat: as discussed earlier, there are several different types of flex loans, as well as some products that use the term “flex loan” to refer to things like installment loans. So, treat these as general rules of thumb, not set-in-stone guidelines.

The Federal Reserve publishes average interest rates on a 24-month personal loan in its G.19 Consumer Credit release, and this can be a good benchmark to gauge your loan offers.

Can you get a flex loan through Upstart?

There isn’t a product through Upstart called a “flex loan.” But if what you actually need is revolving, as-needed access to funds rather than a lump sum, Cash Line™ from Upstart may be a good fit.

Cash Line™ is a revolving personal line of credit available in the Upstart app, and its underwriting can weigh your income and employment history alongside your credit profile, rather than relying on the low-bar, high-APR structure many flex loans use. That broader view may help borrowers whose credit histories don’t fully reflect their ability to repay.

You can check your eligibility for Cash Line™, or check your personalized rate and terms for personal loans through Upstart. Checking your rate for a personal loan through Upstart involves a soft credit inquiry, which doesn’t affect your credit score¹. Checking your options takes just a few minutes, and it can be a great way to compare.

Alternatives to a flex loan

If you are already carrying a flex loan and have a high APR, there are a few moves you can try:

Pay down your flex loan balance before drawing any more money. The more you pay off, the less interest that will accumulate.
Ask the loan issuer about a lower promotional rate. Some lenders can offer temporary rate reductions if you ask, especially if you’ve established a solid payment history.
Check with your credit union for alternatives. Many credit unions offer loan products designed as alternatives to high-APR flex loans.
Build a payoff plan. Figure out how much you can commit each month, and attack the balance aggressively.

Finally, if you’d prefer a lump-sum, fixed-term structure instead of a revolving flex loan, you can also consolidate your higher-interest debt with a personal loan. Checking your eligibility is quick and easy, and carries no obligation.

FAQs

What credit score do you need to qualify for a flex loan?

The credit requirements can vary widely by lender. Many flex loan issuers have a low bar, or skip a credit check entirely. However, the lower the bar, the higher the APR you should expect.

Can you get a flex loan with bad credit or no credit history?

It’s often possible, since many flex loan issuers prioritize verified income and strong bank account history over credit score. However, the easier approval generally comes with a higher interest rate than a traditional personal loan would offer.

Does applying for a flex loan require a hard credit check?

It depends on the lender. Banks and credit unions generally conduct a credit check at final approval, while some online flex loans and storefront lenders run a minimal credit check or none at all.

Why are flex loan interest rates so high?

Not only does revolving debt generally pose a higher risk to lenders, but flex loans also tend to have low qualification thresholds. The APR is priced to reflect the risk.

What’s the difference between a flex loan and a line of credit?

A flex loan is typically a revolving type of debt, similar to a credit card or line of credit. However, some installment loans use the term “flex loan” despite having a fixed repayment schedule, so be sure to check the loan structure before applying.

What happens if you only make the minimum payment on a flex loan?

By making only the minimum payment on a flex loan, interest can accrue on the remaining balance, and your repayment period can stretch out much longer than you expect. It’s common for the interest on a revolving balance to add up to a significant amount over the long term.

Can income help you qualify for a personal loan if your credit score is low?

Some lenders consider factors like income, employment, and other data points alongside your credit history. The specific factors used depend on the lender, but some lenders specifically offer options to borrowers whose credit history doesn’t fully reflect their ability to repay.

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