How to get the most suitable short-term loan

There may be times when no matter how well you budget, you may still need a short term cash infusion to tide you over until you next get paid. Maybe your car has failed its MOT, and you need it to get to work. Or, your washing machine breaks down and using a laundrette is not an option. Perhaps your cat has had an accident and needs emergency veterinary treatment – the costs of which can run into hundreds of pounds.

Whatever the reason you need a short-term loan for, the good news is that there are a number of solutions available. And, as with all financial decisions, it makes sense to do some research first so you can find the most suitable product for you.

What are short-term loans?

There are several products in the marketplace that are classed as short-term loans – the main ones being payday loans and instalment loans.

Payday loans provide a cash amount, typically up to £500, which needs to be repaid in full on your next payday, together with interest and any fees. Payday loans have attracted a lot of negative publicity due to their high interest rates and the fact that many borrowers find they cannot repay the loan on their next payday. This means they have to roll it over (ie. extend it) for a further month, attracting more in interest and fees.

Instalment loans are typically available for amounts up to £3000 (with some providers) and do what it says on the tin – you repay the loan amount together with any interest and fees, in fixed instalments.

Depending on the amount of money you borrow, you will repay it over 13, 26 or 52 weeks, or, for larger amounts, over three, six, nine, 12 or in some cases, 18 months. This form of short-term loan gives you more flexibility in repaying what you owe as you can spread the costs over a pre-agreed period of time.

With our short-term loans, we offer a variety of repayment options, allowing you to manage your budget more effectively.

Choosing your loan

There are a number of things you need to take into consideration when choosing your short-term loan. The main decider is whether you want an instalment loan (to be repaid over a longer period of time) or a payday loan (to be repaid on your next payday).

TIP: A recent change in legislation means that payday lenders must now accept partial repayments anytime. This reduces subsequent loan repayments and saves the customers money.

Once you know the type of short-term loan you want to apply for, you need to some loan comparisons to ensure you find the most appropriate solution for your own unique needs. Typically, you should consider:

How much will the cost of the borrowing be overall, including interest and fees?
Is the interest charged on a daily basis or monthly basis? (This is particularly important if you are considering a payday loan. If you are borrowing an amount to be repaid in two weeks time, then a product that charges interest daily may be more cost-effective than one that calculates the interest monthly)
How much are the fees? You should note that some providers may charge you extra for same-day bank transfers and such like. Make sure you fully understand all the fees and costs involved and compare these on a like-for-like basis
Whom are you buying the product from? Make sure you understand whom you’re buying a product from. If you’re not buying directly from a provider but a broker site, see if the broker charges you a fee. In some cases this can be up to £75 even if you decide not to take the product – so beware
Look at the repayment terms – if you are applying for payday loan, are you able to repay the money early and not incur any financial penalty? With instalment loans, if you’re in a position where you can pay back the loan early, typically you can do so without any financial penalty. This is not always the case with payday loans, so make sure you understand fully the repayment terms and conditions
Finally, make sure you will be able to repay the amount comfortably on the agreed dates. If you have any doubts, then you may wish to investigate other options such as using your credit card if you have one, getting an authorised overdraft from your bank, or at a push, borrowing from friends and family.

Being in the position where you need a cash injection fast can be a very real worry, but if you do your research and make sure you fully understand the costs involved, then you can make an educated decision as to the most suitable short-term loan for you.

We believe our short-term loan options offer easy and fair repayment terms, so why not get in touch with us to see how we can help? Simply fill in our online form or give us a call for a no-obligation chat.