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5 Tips to Apply for Short-Term Personal Loans

5 Tips to Apply for Short-Term Personal Loans

Unplanned expenses can bowl us over. Even if you’ve aced the art of financial planning, impromptu expenses such as repair works, plumbing or medical bills can agitate your budget. 

Most of us are aware of the importance of financial resilience strategies and emergency funds. But how many of us have adequate funding or income resources? In such a case, if an emergency strikes out of the blue, it can ruin your financial balance. 

Tapping into your savings to cover minor expenses may not be the smartest move. However, a short-term loan could help you get by. You can pay off your short-term loan through affordable monthly instalments over a fixed period. 

This article sheds some light on short-term loans for bad credit. Read on to find out five tips for borrowing a short-term loan. 

What are short term loans?

Short-term loans are a high-cost short-term credit solution to help you cater to more minor but urgent expenses. The term of a short term personal loan usually lasts for less than 12 months. Short-term loans have a higher interest rate than a typical personal loan, but just how high depends on your credit score. 

Your credit score is an integral part of your financial scorecard since this metric is a measure of your creditworthiness. Lenders check your credit score to assess their risk proposition when lending money to you. The lower your score, the higher is the risk proposition. Therefore, lenders set higher interest rates for borrowers with a below-average credit score. If you happen to secure a short-term loan with a bad credit score, you should use it responsibly as it can be an opportunity to improve your score. 

Lenders report your repayments to credit bureaus regularly. On time payments contribute to building your credit score. However, missed payments can damage your credit score. In addition, if you default, the lender can get a County Court Judgment issued against you. A CCJ stays on your credit report for six years and could cost you up to 350 points. This could gravely impact your chances of securing credit for future financial milestones and life goals. 

Since the loan amounts for short-term loans is small, the payout is quicker. Lenders typically transfer the money to your bank account through wire transfer; you may receive it within a matter of hours. 

Can I borrow short term loans – bad credit (UK)?

You can surely apply for a short-term loan with bad credit. However, you may not qualify for competitive terms and interest. 

Are there any short term loans for students?

There are times when many students feel strapped for cash. A short term loan could help you get back on track. However, borrowing a loan as a student can be a piece of work. Most lenders prefer employed applicants with proof of income and a good credit score, while students have none of those. 

However, some lenders are open to lending money to students as long as they prove their repayment ability. A lot of students who work part-time may find it slightly easier to get a loan. Lenders usually set a borrowing limit on short term loans for students – £1000. 

Although, short-term loans can be an expensive option – higher interest rates and monthly instalments. So, it is in your best interest to think this through and make an informed decision. 

Is short term loan ‘no credit check’ a myth?

Most people with a low credit score either:

  • want to avoid the damage that multiple individual credit enquiries cause to their credit score
  • want to avoid a credit check because lenders might deny their loan upon a formal credit check

Even the lenders who advertise no credit check loans run a hard formal enquiry into the borrower’s credit profile, as per the FCA’s guidelines. The only difference is that no credit check lenders often lend money to borrowers despite a credit score. 

However, these loans can be tricky to deal with since there is no gauge of the borrower’s repayment ability. Besides, the interest rates for no credit check loans can be much higher than that of a typical short-term loan. Therefore, it is essential to weigh the pros and cons of your credit options to make a well-informed financial decision.  

Is it safe to borrow short term payday loans?

Payday loans, too, are a high-cost short-term credit solution that you can borrow as a cash advance to cover sudden expenses. You can pay off a payday loan within a month or a week. Although, the interest rates for payday loans are exorbitant, with APRs averaging over 400%. 

Payday loans were formerly not regulated by the FCA. But after the rampant rise in their popularity and, consequently, in consumer complaints, the FCA set some necessary guidelines. As a result, payday loans now have a price cap on their interest rates and additional charges to safeguard the borrowers’ interest. 

For every £100 borrowed, the lender cannot charge more than £24 for a 30-day loan. If you miss a payment or fail to keep up with your repayment schedule, the maximum penalty a lender can impose is £15 plus the interest on the borrowed amount. The price cap also ascertains that you don’t end up paying more than twice you’re the borrowed amount to your payday lender.

5 Tips for finding the best short term loans

Here are some tips to help you find your ideal short term loan:

  • Check the FCA’s Financial Services Register to see evaluate your lender’s legitimacy. 
  • Regularly check your credit report and dispute any erroneous records to earn credit points. 
  • Space out your applications to protect your credit score from multiple credit checks in a short span.
  • If possible, use the direct debit facility to ensure timely payments on your monthly instalments. 
  • Check for hidden charges in your loan agreement – early repayment charge, missed repayment fine, etc. 


Short-term loans are a quick solution to an unplanned and urgent cash crunch, albeit at high-interest rates. However, like any other credit solution, you should handle your short-term loan responsibly and make timely repayments to maintain a good credit score.

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