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What’s a short term loan?

There are lots of different views of what a short term loan is. We’ve decided to describe all loans from £100 to £3000 repayable over a period of up to 36 months, as a short term loan.

Loanbuzz can help you find a short term loan

There are lots of lenders out there with varying rates and different repayment periodswilling to offer small loans. Our Eligibility Checker will help you to find a suitable lender in just a few minutes, without impacting your credit score.

We’ve put together a simple guide describing the types of lenders offering short term loans for up to £1,000. Where available and if the products match your needs, offers available from these lenders will be shown in your search results.

  • Bank loans

Banks may lend in the £100 to £1,000 range. Rates will differ dependent on how much you borrow and the period over which you repay. Beware that the rate advertised may not be the final rate you'll receive. Where bank loans feature in your search results, the loan offer will be for an installment loan with no security required. It’s worth noting that some bank loans may require you to be a homeowner to get access to their lower rates of interest.

  • Supermarket loans

Some of the major supermarkets have been granted banking licences and offer unsecured loans to customers with a good credit history. Interest rates will range from single figures up into the late-teens dependent on how much you borrow. Repayment periods will range from one to five years.

  • Peer to peer loans

Peer to peer lenders match savers with potential borrowers. They offer competitive rates of interest to both. Loans are ordinarily made available to customers with a good credit history. Loan amounts, repayment periods and interest rates are at similar levels to bank and supermarket loans.

  • Guarantor lenders

Guarantor lenders may offer small and larger loans to people with a less than perfect credit history. If you’ve got someone who’s willing and able to support your application, then a guarantor loan could be an option worth considering. See further details here

Ready to get a loan ?

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What not to do

Don’t apply for a short term loan through a site that is not regulated by the FCA. Unfortunately there are a number of brokers, lead generators and "ping trees" out there who advertise loans, without the ability to provide you with access directly to them. Instead they’ll take lots of details from you, send your personal information to as many lenders as possible and more than likely, sell your details on. This often results in cold callers texting and phoning you repeatedly.

Loanbuzz will never sell your details to any spammers or cold callers, we don’t charge you to compare loans and you're under no obligation to take out a loan if you compare them using our service.

High-cost short-term loans

High-cost short-term loans (HCST), are loans designed to be repaid over a short term. Loan amounts generally range from £100 to £3000, with repayment terms of up to 36 months.
HCST loans can be expensive and should be considered carefully. So if you’re thinking of taking a HCST loan, compare your options and make sure you can afford the repayments.
The Financial Conduct Authority brought in legislation to cap the amount of interest that high-cost short-term lenders can charge. Rates are capped at 0.8% interest per day or 100% of the amount borrowed. There’s also a £15 cap on default fees. So, if you borrow £200, the maximum you can be charged in interest is £200.

Why are such high APR’s advertised for high-cost short-term loans?

Because if you were to borrow this type of product over a year or more "cap-free" then the APR is a representation of what you would be charged.APR calculations were designed to be a means of comparing lending products on a like-for-like basis, but when it comes to short term loans (particularly over a term of 6 months or less), the APR is not as useful. We believe it's better to compare short term loans based on ‘the total amount repayable’.

Pricing and things to watch out for

Prices for short term loans can vary substantially. Make sure you compare your options before applying as choosing the right option may have a big impact on the total amount you’ll repay.
Your credit history affects which loans will be available to you. The best rates continue to be reserved for people with an excellent credit history. If you have a less than perfect or bad credit history and try applying loans with the best rates, unfortunately you’re likely to be declined. Being declined will impact your credit history and will make it increasingly difficult to get accepted for the better rates in the future.

Approval criteria

Approval criteria is different between lenders and from product to product. As with any personal loan, you need to make sure that you:

  • Are a UK resident,
  • Are over 18,
  • Have a UK bank account, and
  • Are able to afford repayments on the loan that you want to take out.

One last thing ...

Due to the different types of lenders that offer short term loans, prices vary substantially. It’s really important that you compare your options first. If youhave a poor credit history, it's best to look into loans that are aimed at you, as applying for the best rates may only result in you being declined. As always before applying for finance, make sure you can afford the repayments - if you have any doubt then don't apply.

Ready to get a loan ?

Use our personalised search to find your loan first time without harming your credit score

check your eligibility for a loan