In this article:
- What are short term loans?
- How can I find the best short term loans in the UK?
- What would I need a short term loan for?
- Can allthelenders help me?
- What is the difference between payday loans and short term loans?
- Will I qualify for a short term loan?
- Do I need a Guarantor?
- What are the benefits of short term loans?
- I have bad credit, would I be eligible?
- Are short term loans good for my credit rating?
- How can I apply for a short term loan?
A short term loan is generally considered to be a personal, unsecured loan that is between 2 and 12 months long and up to around £1000.
Short term loans have superseded the payday loan – in the UK someone referring to a payday loan would probably be speaking about a short term loan. This is because many of the payday lenders now only offer short term loans and the term payday loan has stuck with them.
When the FCA took over regulation of the high cost short term credit sector and introduced the price cap many lenders left the payday loan behind and started offering larger loans over longer periods because it was more profitable – it’s near impossible for a lender to make any profit on a small loan for just a few days now.
Since 2015 the short term loan market has grown exponentially and many lenders have entered – and many lenders have also left – the industry. Competition is now strong among lenders and this has stimulated lenders into offering better deals and lower prices.
Short term loans are still considered high cost credit because they are used primarily by people with some bad credit that cannot get financial assistance anywhere else. They are more expensive than other means of borrowing and because of this they should be used with caution and only when absolutely necessary.
How can I find the best short term loans in the UK?
If you are looking for short term loans then you really are already in the best place. We compare more short term lenders than anyone else and our comparisons are fair and impartial.
Despite what many people may think, the cost of a loan can vary greatly between lenders and it’s always wise to shop around before agreeing to a loan – how do you know you’re getting the best deal possible?
We work with the very best short term lenders in the UK – all of the lenders we work with are FCA authorised and follow the strict guidelines set out by the FCA to ensure you get the most protection possible and they treat you fairly.
What would I need a short term loan for?
Short term loans should only be used to cover emergency short falls in cash or for something unexpected. Some of the things people use short term loans for include:
- Car repairs
- Home appliance repairs or replacement
- Unexpected bills
One of the benefits of short term loans are that they are usually paid out very quickly so if you need the money sooner rather than later, subject to approval and the time of day you could get your loan the same day.
The speed of service is something that makes these types of loans appealing to many people – whilst many alternatives are cheaper they cannot offer the convenience that short term lenders are able to offer.
It is important to remember that short term loans are high cost however and are not suitable for long term borrowing. With all this in mind, using the services of a price comparison site couldn’t be more important.
Can allthelenders help me?
We are proud to be a trusted, FCA authorised price comparison website for short term loans and our primary goal is ensuring that if you do need to use short term lenders, you get the best deal from reputable and honest lenders.
We compare most of the lenders in the UK and have been doing so for over 8 years. We do not compare brokers or intermediaries on here so you can be sure that every company you see in our comparison tables are direct lenders.
Our price comparisons are 100% independent and impartial – we rank our loan products from the cheapest total amount payable to the most expensive, so you’ll always see the best deal first. Lenders cannot pay to be higher up the table and our commercial arrangement with lenders never affect the results of the comparison – the best deal will always be at the top and the most expensive at the bottom (where lenders have the same charge we display them in a random order every time).
In addition to our excellent price comparison services, allthelenders allows you to apply for a short term loan using our Eligibility Checker – this means we perform a soft search on your credit file and lenders will tell us if they would accept you for a loan or not, this is a great way to see who would fund your loan without harming your credit score.
What’s the difference between short term loans and payday loans?
The main difference between the 2 is the length of time you have to repay the loan. A payday loan would usually have to be repaid in full within 45 days. A short term loan can be repaid over a period of months, you decide how long when you apply, usually, it’s between 2 and 12 months.
Payday loans are useful if you know you can settle the loan in full on your next payday and then you don’t have any further payments to make, however, spreading the cost of the loan over a few months usually eases the financial burden payday loans can bring – losing a big chunk of your pay usually leaves many people borrowing again and then the cycle of persistent borrowing starts.
In the UK as the payday loan has all but ended the short term loan industry has flourished. When you hear or read reference to payday loans or payday lenders they will now inevitably be referring to short term lenders.
Will I qualify for a short term loan?
Short term loans are considered suitable for all credit types, including people with some bad or adverse credit.
You do not need a perfect credit score to apply and get accepted, basic criteria that the majority of UK lenders ask for is:
- You must be over 18 years of age
- You must be a UK citizen
- You must have a UK bank account and debit card
- You should be employed and have regular income
- You mustn’t be bankrupt or in an IVA (or thinking of entering one)
Short term loans are primarily used by those with some bad credit which is why they cost more than most mainstream credit products. However, this also means that the loans can be accessed by lots more people than mainstream credit products.
The best way to see if you would be accepted for a short term loan is to use our Eligibility Checker – we can tell you the lenders that would accept a loan application from you without it affecting your credit score, it will save you time and money because you’ll be able to take your pick from the lenders we present to you.
Do I need a Guarantor?
No, short term loans are different to guarantor loans and you will not need to ask anyone to guarantee the repayments for you.
Short term loans are unsecured personal loans and credit is granted based on an assessment of your own personal financial circumstances. This is done using a combination of information they get from you on your application form, the information they get from the credit reference agencies and various other forms of identification. (anti fraud checks etc).
Short term loans are often a more attractive proposition that guarantor loans as you don’t have to find or speak to anyone else about the loan, however, the loan amounts will be much smaller as will the maximum repayment period in comparison to guarantor loans.
What are the benefits of short term loans?
If you are considering a short term loan you may be wondering what advantages they have over other forms of credit, some of which we’ll cover here.
They can be cheaper than overdrafts
In some circumstances, borrowing from short term lenders can be cheaper than using an unauthorised overdraft from your bank.
If you need the money quickly, few options will beat the speed at which a short term loan could be in your bank account
They’re safe and secure
Short term loan lenders are now strictly regulated by the FCA and offer excellent customer support and help if you fall into difficulties repaying the loan.
When considering the benefits of short term loans you should not forget that borrowing from high-cost short term credit lenders is expensive and not sustainable for longer-term borrowing.
I have bad credit, would I be eligible?
This depends on how bad your credit is but assuming you do not have any CCJ’s then there is a chance that you would get accepted for a loan.
That being said, you should consider the reasons that you may have bad credit in the first place – would an expensive short term loan help your situation or potentially make it worse? If there is a chance it could make it worse we would advise against using short term loans and look at some of our short term loan alternatives.
The primary market for short term lenders are those with some history of bad credit, this is the reason the interest on short term loans is higher than most other products . It’s also higher because the loans are for a much shorter period of time than personal loans that can be up to 7 years long.
It may be worth you checking your credit report for an idea on how your credit looks to lenders, alternatively why not try our Eligibility Checker to see the lenders that may accept you before you make a full application, it won’t harm your credit score!
Are short term loans good for my credit rating?
A point that is constantly argued is whether short term loans are good or bad for your credit rating. On the face of it, getting a loan and managing it correctly (as in making all of the repayments on time) would have a positive effect on your credit score, it demonstrates an ability to manage your finances and that you can borrow responsibly.
On the other hand, many other lenders (outside of short term credit lenders) look upon the use of short term loans as a sign that you are unable to manage your finances and that you could be too much of a risk to lend to.
We understand that mortgage lenders are particularly cautious of those that have used payday or short term loans even if it was some time ago.
You need to weigh up this risks of using short term loans before applying, if you are going to be applying for a mortgage in the near future you may wish to looks at other options first.
How can I apply for a short term loan?
Generally speaking, loan applications would be made directly with the lender, however, using our Eligibility Checker can make that process much quicker for you.
We search the market for you and return a list of lenders that would accept an application from you, all without affecting your credit score.
If you would prefer to apply to a lender directly then why not make use of our comprehensive price comparison tools? We compare all of the best lenders in the UK and can tell you the cheapest lender for the loan you’re looking for and then you can proceed to the lenders site directly and continue with them.