When you have bad credit, it’s easy to feel sad and confused about where to get cash during an emergency. Thankfully, you can get a short-term loan even with bad credit.
Before deciding on a short-term loan, it’s important to shop around and explore your options. Not all short-term loans have the same rates or loan terms. Comparing your options ensures you get the best APR rate and repayment terms. It’s also a great way to find a loan that is easy to repay so you can clear your debt quickly.
How to choose a short term loan
When taking a loan, be aware of the extra costs involved. First, check the interest rate. Charges for short-term loans vary from company to company.
The average cost is roughly £24 per £100 borrowed. However, the total cost depends on the amount you’re borrowing and the timeline you’ll need to repay the loan.
Next, check if the interest rate is the Annual Percentage Rate (APR). It shows the total amount of interest you’ll pay on the loan. Are there prepayment penalties? Ask the lender if you’ll be charged a fee for paying the loan early.
Depending on your lender, you may have the option for early repayments or to stick to a strict schedule. Again, you’ll see this under the terms and conditions of your loan, or you could ask permission from your lender.
You’ll pay more in interest if you choose to borrow for a longer period. You’ll start making repayments from the first month after you receive the funds. Some lenders have the option to pay weekly instalments.
You take a secured loan against the value of your house. It’s a long-term commitment where the loan can be paid back over a few years instead of months.
Choose a lender that offers an unsecured loan for short-term loans. You don’t need collateral for an unsecured loan. However, if you have a decent credit score, you should receive a competitive rate. Unsecured loans carry a high risk for lenders because they don’t have security to claim when you default on the loan.
When you take out a loan, read the terms and conditions carefully. Each lender has its unique terms you must follow. It’s up to you to determine if you’re comfortable with these terms.
An early repayment charge (ERC) is a penalty your loan provider charges if you pay off the short term loan early. Usually, the ERC is a percentage of the outstanding repayment. Therefore, it’s essential to check if your loan provider has an early repayment penalty as a loan condition.
Thankfully, Cashfloat early repayment is free with Cashfloat. You won’t get charged for paying your loan earlier than the loan term states.
The best UK loan lenders use digital portals to provide customers with access to financial services anytime and from any device. Check if your preferred loan lender offers a self-service loan portal where you can view and manage your short term loan.
Cashfloat login makes loan management easy with features such as:
- An easy-to-use interface to manage your Cashfloat account
- A loan calculator that tells you how much you’ll save if you repay the total amount now
- Real-time update on your current payment plan and fees
- Apply for a new loan
- Update your contact and payment details
Read customer reviews
When you’re faced with multiple options and unsure how to choose, reviews can help you make the right decision. Reviews give you an overview of financial products that closely match your requirements.
What do users say about customer support, the ease of getting a loan and how the company handles late loan repayment? The answers could provide clarity to make a decision.
From the comparison table below, you’ll notice that each lending company in the UK has a slightly different interest rate. Ideally, you want a lender with the lowest APR and lowest interest rate per annum, so you’re repaying the least amount possible.
List of Direct Lenders in the UK
What are some alternatives to short-term loans?
You can apply for a 0% credit card instead of a short-term loan with a good credit record. A 0% purchase credit card allows you to pay for an item and spread the repayment over a defined timeline without interest.
Many lenders offer this option, and the right choice depends on what you need to purchase. Do not withdraw cash with a 0% credit card, or you’ll attract a fee. You’ll also need to pay the monthly minimum, or you’ll lose the interest-free deal. Low APR credit cards are another option to consider for short-term borrowing.Personal loan with early repayment
You can take out a personal loan and repay it early. There’s an early repayment fee to compensate the lender. This means you’ll end up paying more than the estimated amount shown in the loan offer.Flexible loan
A flexible loan works like a personal loan but offers more wiggle room for making repayments. With a flexible loan, you can adjust the repayment amount without incurring a penalty.
It’s helpful when you need to take out more credit. Flexible loans are more challenging to get and more expensive than other loan types. A building society or bank mostly gives it for a larger sum.Bank loans
With a decent credit score, you can get approved for a personal loan from your bank. Unlike a direct lender payday loan, a personal loan is for a more significant amount, and payment is spread over an extended period. Read the loan terms and conditions to know the prepayment penalty if you intend to repay the loan early.
If you have a current account, you can use more money than what’s available in your bank account. In the UK, the interest on overdrafts ranges from 15% to 40% Equivalent Annual Rate (EAR).
Most banks have an overdraft calculator, so you know the overdraft costs and can compare cheaper options. Some banks even offer a 0% overdraft on smaller amounts of money.Credit unions
Credit unions are not-for-profit organisations established for members to save or borrow money at more affordable rates than traditional banks or payday lenders. Examples of credit unions in the UK could be a credit union in a community or your industry.Line of Credit
If you’re frequently in a position where you need more cash than what’s available on hand, a line of credit is a financial product to consider.
Lines of credit are available for businesses that need ongoing access to additional capital. You’ll need to repay the minimum amount each month, but you can borrow as much as like without exceeding your agreed limits. At some point, your lender will reduce borrowing frequency (standard amortising payments) to ensure you repay your debt and eliminate the amount you owe.
Who can get a short term loan in the UK?
These are the requirements for a short-term loan:
- UK resident
- At least 18 years old at the time of applying for a loan
- Show proof of address for three years
- Mobile and email details
- Ability to pass affordability and credit checks
- Bank account details
- Proof of income
- Cannot be bankrupt
Get a Short Term Loan in 30 Minutes with Cashfloat
While there are many alternatives to a short term loan, none of them will give you quick cash within hours. Approval may take days and even weeks in some scenarios. However, if you need money right now for an emergency to cover bills or make purchases before your next payday, Cashfloat can help.
Apply now and get the funds in your bank account within a few hours instead of waiting days. You don’t need collateral, and we also provide loan facilities if you have bad credit.GET YOUR SHORT TERM LOAN WITHIN 1 HOUR!
Why are short term loans expensive?
Short term loans are expensive because of the high-risk nature of the loan. It’s a type of unsecured lending. Lenders don’t have security against the loan, such as a car or property, which means they have nothing to collect if you default.
What is the difference between short-term and long-term loans?
Short term loans are repaid within a shorter timeline of one to six months. Long term loans are repaid over a few years ranging from 10-20 years. You may take out a short term loan when you need a small amount or quick cash. However, long term loans are usually associated with more significant transactions such as a business loan or mortgage.
What is the interest rate for a short term loan?
There’s an industry-wide interest cap on cheap short term loans. The maximum daily interest rate is 0.8%, and you’ll not pay back more than 100% interest rate on the initial loan amount.
Can I get a short term loan with bad credit?
Many UK lenders consider applicants with bad credit. The loans are for a small amount with a short repayment cycle.
How long is a typical short term loan?
Short term loans have a repayment period of 30 days and up to 12 months.
Do I need a guarantor for a short term loan?
Many lenders don’t require a guarantor for short term borrowing. However, if you’ve had credit issues, a guarantor could make it easier to get approved for a loan or negotiate a competitive rate.
Are short term loans good for credit rating?
Just like any credit application, a short term loan will show up on your credit card. However, you could improve your credit rating if you make your repayments on time.
Can I get a short term loan as a student?
Short term loans for students are similar to any loan regarding the amount you can borrow and the timeline for repayment. However, you should note that being a student doesn’t exempt you from a bad credit record if you do not pay your loan on time. Therefore, only apply for a short term loan if you’re sure you’ll make the repayments on time.