Flex Loans: Benefits and Drawbacks

By Sarah Li Cain · March 07, 2022 · 7 minute read

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Flex Loans: Benefits and Drawbacks

If you’re looking to borrow money quickly and without going through a lengthy application process, flex loans can be a smart solution. It offers you a line of credit similar to a credit card, giving borrowers the flexibility they may need.

However, taking out a flex loan can get expensive and be risky to your financial situation. Before taking one out, learn exactly what flex loans are and what you need to consider.

What Is a Flex Loan?

A flex loan is an open line of credit that’s unsecured. After approval, you can use your flex loan account to withdraw funds up to your approved credit limit at any time.

They’re similar to a personal line of credit except your rate and borrowing limit isn’t dependent on your credit score. To qualify borrowers, many financial institutions offering lines of credit will look at factors such as whether there is collateral to secure the loan or it’s unsecured, your credit score, and income, among other factors. Rates, terms, and any applicable fees will be based on these factors.

Because flex loans tend not to require a credit check, it tends to be an attractive option for those who lack a credit history or have a limited credit history. However, interest rates can be high, so it’s a good idea to compare lenders, rates, and terms.

How Do Flex Loans Work?

A flex loan works similar to a credit card in that it’s a revolving line of credit. Applicants are approved for a credit limit and can borrow up to that amount. As the balance is paid down, additional funds can be borrowed.

Borrowers will receive regular statements showing how much they’ve borrowed and the interest owed. Generally, monthly minimum payments are required. Some lenders charge fees, sometimes each time the flex loan is used, but fees can also be charged daily or monthly.

How Much Can You Get With a Flex Loan?

The exact amount you’ll be approved for will vary from lender to lender. In some cases, your credit limit is based on your income. You can usually borrow up to a few thousand dollars — credit limits on flex loans tend to be lower than credit limits for personal lines of credit.

If you want to borrow more, you’ll need to pay down the balance you owe first.

Will a Flex Loan Hurt My Credit?

Getting a flex loan may not require a credit check so applying for one won’t necessarily affect your credit score. But lenders assume extra risk when they don’t do a credit check, so they might charge higher interest to make up for that.

A flex loan may hurt your credit if you don’t manage it responsibly. As with other types of debt — including personal loans, making late payments or missing payments on a flex loan may adversely affect your credit score. It’s a good idea to budget carefully to ensure you’re not borrowing more than you afford to pay back.

Recommended: 11 Types of Personal Loans & Their Differences

Dangers of Flex Loans

Flex loans may be an attractive borrowing option because even those with poor credit can borrow money quickly. However, flex loans can present potential dangers.

Interest Rates

The cost of flex loans is extremely high compared to other types of loans — interest rates can be in the triple digits. If a lender charges you interest on a daily basis, your payments could skyrocket.

Minimum Payments

You do have the option to pay only the minimum payments on your flex loan, but you’ll likely pay more in interest. Since interest continues to accrue the longer you have a loan balance, you may find it hard to pay off the entire balance.

Excessive Debt

It can be tempting to borrow money repeatedly but doing so can come at a cost. If you continue to borrow money and don’t have a plan to pay down the amount you owe, it could lead to excessive debt.

Benefits of Flex Loans

Flex loans may be beneficial for some borrowers. Some advantages include having quick access to funds and more lenient credit requirements.

Application Process

In many cases, you can apply for and receive a lending decision within minutes, especially if you apply online.

Access to Funds

You can make withdrawals from your flex loan as often as you want, and the funds will be deposited into your bank account.

Recommended: Secured Loans That Are Shared

Credit Score

Most flex loan lenders won’t subject you to a credit check, making it less burdensome to qualify for a flex loan even if you don’t have good credit.


In many cases, flex loans have more lenient requirements compared to other types of loans. In addition to giving the lender your personal details, you may only have to provide proof of income.

Flexible Payment Terms

Each month or billing cycle, you can pay the minimum due or more without penalties to pay down your debt faster.

When Should You Take Out a Flex Loan?

A flex loan may be one financing option for those who need quick access to cash and don’t want to go through a lengthy application process each time. It’s also an option for those who may want to have a backup source of funds in case of an emergency, like an unexpected car repair or dental bill, which are also ways personal loan funds can be spent.

When to Apply for a Flex Loan

There may be other ways to get needed cash without paying interest rates as high as flex loans tend to offer. But if you’ve exhausted all other options, even a loan from a pawn shop, and you have a plan to repay the loan at the lowest possible cost to you, it may be an option you could pursue.

Alternatives to Flex Loans

Before applying for a flex loan, you may want to consider the following alternatives:

•   Credit cards: Credit cards are also a form of revolving credit you can draw from on a recurring basis. While interest charges for credit cards can be high, they tend to be much lower than flex loans. Depending on the card, you may also have an annual fee and other fees based on your use of the account.

•   Personal line of credit: If you have healthy credit, a personal line of credit may be a worthy alternative because of its typically lower interest rates. You will be subject to a credit check and the application process may take longer compared to a flex loan.

•   Personal loan with a guarantor: If your income is not keeping you from qualifying for a loan, but you lack a credit history, a guarantor added to the loan agreement might be an option to consider. A guarantor is legally responsible for the repayment of the loan if the borrower defaults, but has no legal claim to any property the funds were used to purchase.

Recommended: Personal Loan vs Personal Line of Credit

The Takeaway

Before taking out a loan, you may want to consider your reason for borrowing money. If you need cash for an emergency, looking at all your borrowing options before settling on a flex loan is a smart idea.

Shopping around is a good way to see what you may qualify for and to find a lender you feel comfortable working with. SoFi Personal Loans offer competitive, fixed rates and have no fees required. Checking your rate takes just one minute and will not affect your credit score.*

Learn more about SoFi Personal Loans


What is a flex loan?

A flex loan is revolving credit from which borrowers can withdraw funds up to their credit limit. As they pay down the balance, they can continue borrowing funds.

How much can you get with a flex loan?

Borrowing limits for flex loans will depend on the lender. In most cases, borrowers can be approved for anywhere from a few hundred to a few thousand dollars.

Will a flex loan hurt my credit?

Applying for a flex loan typically won’t affect your credit because not all lenders check your credit score. However, if you have late or missed payments, lenders may report your borrowing activity to credit bureaus, which could negatively affect your credit.

Photo credit: iStock/PeopleImages

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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