Learnbonds UK

Best Short Term Loan Providers & Sites in 2019

15. January 2020

If you’re looking to arrange short term funding, then this can come in a range of shapes and sizes. However, the specific short term loan type that you opt for will ultimately depend on two key factors – how long you need to borrow the money for, and how much you need to borrow. For example, if you’re happy to spread the payments out over the course of 1 year, then your best option is likely to be a personal loan – not least because the APR rates are likely to be more favourable.

However, if you only need a small amount of money, then you might need to go with a more expensive payday loan. Either way, we will cover everything that you need to know in our Short Term Loan guide. Within it, we’ll explain what a short term loan actually is, how they work, the different options available, how much you’ll typically pay, and more.

Note: To clarify, a short term loan is a loan that is taken out for less than 1 year. Lenders typically reserve their best rates for longer-term loans, so you’ll likely pay a higher rate of interest on a short term loan.

What are the Pros and Cons of Short Term Loans?

The Pros

  • Perfect if you need to borrow funds quickly
  • Keep control of your finances by paying the loan off in less than 1 year
  • Suitable for credit profiles of all sizes
  • Choose from an instalment loan or a payday loan
  • Complete the entire application online

The Cons

  • Short term loans typically cost more than a longer-term loan

How to Apply for a Short Term Loan? Read our Step-by-step Guide:

If you’ve never applied for a short term loan before, we’ve listed the key steps that you will need to take below. Be sure to read through these thoroughly before proceeding with your application!

Step 1: Decide what type of loan you want

Your first port of call will be to decide what sort of loan package you need. This should cover the size of the loan that you require, and how long you need to pay it back. Once you have assessed the fundamentals, you will then need to find a trusted lender that can facilitate your loan. To help you along the way, we have listed the best 3 short term loan providers currently in the UK market further down in our guide.

Note: If you choose a lender that isn’t on our list of recommended providers, make sure that your chosen lender is regulated by the Financial Conduct Authority (FCA). This will ensure that the lender engages in ethical lending practices!.

Step 2: Start the application process

Once you have found a suitable short term loan provider, you will then to start the online application. Simply enter the amount of money that you want to borrow alongside the number of weeks/months you need to pay it back, and move to the next stage of the application.

Step 3: Enter your personal and financial information

Irrespective of what loan type you are applying for, you will always need to provide the lender with a range of information linked to your identity and financial standing. Regarding the former, this will include your full name, home address, date of birth, residency status, telephone number, and email address. When it comes to your financial standing, you will initially need to let the lender know what your employment status is, how much you earn each month, the name and location of your employer, and how frequently you get paid.

Furthermore, the lender will also ask you some question regarding your current and previous relationship with credit. Notably, this will include what debt obligations you currently have outstanding, such as other loans, credit cards, or store cards.

Step 4: Read the digital loan agreement and sign it

Within 30-60 seconds of submitting your application, the lender will let you know whether or not your application was successful. If it was, you will now be able to view your respective loan terms. Be sure to read through the terms thoroughly, as this will outline the APR you’ll be paying, and what your weekly/monthly payments will amount to. Furthermore, you’ll also need to assess what late or missed payment fees the lender charges in the unfortunate event that you fall behind on the loan.

If you’re happy with the terms of the loan, then you’ll now need to enter your bank account details. This is the bank account that your loan funds will be transferred to. Moreover, you’ll likely be asked to set up a direct debit from this bank account so that you can make your repayments automatically. Finally, sign the loan agreement to complete the application.

Step 5: Satisfy the verification checks

There may come a time where the lender requires a bit more information from you before they can transfer your loan funds across. If they do, this is likely to be in relation to your employment status. We often find that lenders will ask for a copy of your recent payslip to verify your stated income, or to validate your place of work. Alternatively, they might call you at your place of work to do this, although they will let you know beforehand.

Step 6: Funding and repaying the money

Once the lender is satisfied with your identity and employment checks, they will then transfer the loan funds into your bank account. You will then, of course, need to start making your weekly or monthly payments. As you will have likely set up a direct debit, this will come out of your bank account on the agreed payment date(s) automatically. As such, make sure that you always have enough money in your account to cover the payments.

Best 3 Short Term Loan Providers 2019:

The short term loan space is now jam-packed with loan providers, with thousands of lenders now offering loans of all shapes and sizes. As great as consumer choice can be, this can also make it somewhat difficult to know which lender to go with. As such, we have listed the best three short term loan providers below. Before we do, be sure to read through the strict set of criteria that we implement before listing a loan provider on our site.

Criteria used to rank the best short term lenders

❓Lenders with the most competitive interest rates

❓How much the lender is able to offer

❓What credit score you need to obtain the short term loan

❓What loan terms are available

❓Registered with the FCA as an approved UK lender

1. Very Merry Loans – Rates from 49.9% APR

 

If you are looking for a short term loan provider that is flexible with who it lends to, then it might be worth checking out Very Merry Loans. The UK loan platform facilitates loans of between £100 and £2,000, which should be sufficient for your short term financing needs. What we also like about Very Merry Loans is that you have the choice of how long you want to borrow the funds for, which ranges from just 2 months, up to a maximum of 1 year. On the contrary, if your credit profile is somewhat damaged, you could end up paying as much as 1,333% APR.

With that being said, we would suggest evaluating what rate Very Merry Loans is able to offer by completing the initial pre-approval search, and then making a decision from there. In terms of the underlying APR, this can vary quite considerably. The key factor that the lender will look for is the current health of your credit score. In fact, if your credit profile is in good standing, then you might be able to get your APR rate down to just 49.9% APR.

Key Points:

? Short term loans of between £200 and £2,000

? Lowest APR interest rate on offer is 49.9%

? Highest APR interest rate on offer is 1,333%

? Loan terms of between 2 months and 12 months

? Not a direct lender – you will be matched with the best deals as per your needs

2. Admiral – Very competitive APR rates - minimum term of 12 months

While Admiral does not offer super-short terms loans like Very Merry Loans, the lender can facilitate a 12-month person loan at an extremely competitive rate of interest. While the specific rate will, of course, vary depending on your financial standing, a £7,400 loan comes with a representative rate of 3.4% APR. This offers excellent value, especially when you consider that the lowest rate of APR that Very Merry Loans can offer is 49.9%.

However, in order to get the lowest rate at Admiral, you will need to have an excellent credit score. In terms of how much you can borrow, this starts at a minimum of £1,000, up to a maximum of £25,000. However, if you opt for the smallest loan size of £1,000, the APR jumps to a representative rate of 13.2% APR. Finally, all Admiral loans can be completed 100% online.

Key Points:

? Short term loans of between £1,000 and £25,000

? Best rate of 3.4% APR on loans of £7,400

? Minimum loan term of 12 months

? 1-year loans come with a  representative rate of 13.2% APR

? Perfect for those with an excellent credit profile

3. Ocean Finance – Best if your credit is less than ideal

Ocean Finance is a comparison-style loan website that allows you to find the best deals in the market based on your requirements and financial standing. You initially need to enter your loan requirements into the search tool, alongside information linked to your identity and income status. Once you’ve completed the online form, Ocean Finance will then list the lenders within its network that are able to facilitate your short term loan. Take note, most of the lenders in the Ocean Finance network are typically suited for those with less than ideal credit.

As such, if your credit standing is healthy, you might be best to opt with Admiral. Nevertheless, the Ocean Finance platform allows you to apply for short term loans from just £100, up to a maximum of £10,000. Furthermore, the minimum loan term is 3 months, up to a maximum of 5 years. However, if its short term financing you need, then you’ll need to cap this to a maximum of 12 months.

Key Points:

? Short term loans of between £100 and £10,000

? Loan term from 3 months – up to 5 years

? Soft-credit enquiry – applying won’t hurt your credit score

? Not a direct lender

? Perfect for those with bad credit

What is a Short Term Loan?

In its most basic form, a short term loan is simply a loan that comes with a repayment term of less than 12 months. This makes the term a broad one, as a short term loan could, in theory, cover both a payday loan and an instalment loan – as long as it does not exceed a loan term of 1 year. For example, while you might require a short term loan of £200 to cover the costs of a leaking pipe, equally, a short term loan might also see you borrow £3,000 over the space of 12 months to pay for an upcoming holiday.

With that being said, here’s a quick breakdown of the two main short term loan types.

✔️ Payday Loan 

You might need to choose a payday loan if the amount of money that you require is very low. For example, while personal loan companies will typically not facilitate a loan for less than £1,000, payday loan firms typically offer loans from just £100 – sometimes less.

As you may well know, payday loans often come with a really high rate of interest, so you’ll need to bear this in mind before proceeding. On the other hand, if you only need to borrow a very small amount, then you’ll likely have no other option, not least because personal loans require you to borrow much more.

✔️ Personal Loan 

If you need to borrow a slightly larger amount of money, then you might be best off going with a personal loan. However, it is important to remember that in most cases, the minimum loan term will sit at 12 months.

On the flip side, personal loans will usually come with a much more favourable rate of interest in comparison to a payday loan, especially if you are in receipt of a healthy credit score. Just remember, if you take out a personal loan of more than 1 year, then this is then considered a long term loan.

Am I eligible for a Short Term Loan?

While some lenders will offer exceptionally good rates on short term loans, they will typically tailor their packages towards borrowers with a good credit profile. With that being said, there is also a plethora of lenders that offer their loans to those with poor, or very poor credit profiles. As such, the minimum eligibility requirements will vary depending on the short term loan provider you go with.

Nevertheless, here is a quick breakdown of some of the key metrics that short term loan lenders will look for when you go through the application process.

✔️ Credit Score

Most lenders will need to run a credit check on you when you apply for a short term loan. This allows lenders to determine whether or not you are suitable for the loan, and if you are, how much interest they should charge you to offset the risks. If you believe that your credit score is damaged, you might be able to find a no credit check lender. Rather than basing their decision on your credit score per-say, they’ll instead look at other metrics such as your income.

✔️ Income

Short term loan providers will always ask you about your income. This not only includes your employment status (full-time, part-time, self-employed, etc.), but more crucially – how much you earn. The overarching reason for this is that the lender needs to feel satisfied that you have the means to repay your loan back on time. As such, most lenders will state that you need to have a minimum income in order to qualify for the loan. Once again, if you are opting for a payday loan lender, you might be eligible even if you are on a low income.

✔️ Current Debt Obligations

Although you might be in possession of a good credit score and a reasonably good income, this doesn’t necessarily mean that you will be eligible for a short term loan. The reason for this is that the lender will need to assess what debts you currently have outstanding. For example, if you currently have large balances outstanding across multiple loans and credit cards, the lender might deem that taking out an additional debt product is too risky for you and thus – decline the application.

✔️ Age, Residency, and UK Bank Account

The final eligibility requirements that you will need to take into account – irrespective of the short term loan provider you go with, is with respect to your age, residency status, and bank account. In a nutshell, you will need to be aged at least 18 in order to qualify for a short term loan, and have been a UK resident for at least 3 years. Moreover, you will also need to have a valid UK bank account. This is to ensure that you can set up a direct debit agreement on your loan repayments.

FAQs:

What is a short term loan?

In its purest form, a short term loan is a loan that comes with a term of less than 12 months. This could be anything from a payday loan of 7 days, up to a fully-fledged personal loan with instalments being made over the course of 1 year.

Do I need to have a good credit score to get a short term loan?

Due to the sheer size of the online lending space, there are now short term loans available for all credit profiles. If you have great credit, then you'll benefit from the best interest rates. However, if your credit is less than ideal, you will still likely find a suitable short term loan lender, albeit, your interest will be much higher.

How quickly can I get a short term loan?

If you are opting for a conventional payday loan lender, then you might be able to get the funds in as quickly as one hour. However, this is on the proviso that the lender is able to verify your information electronically, without the need of supporting documentation.

Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.