Short Term Loans UK – What You Need to Know

What Are Short Term Loans?

Short term loans provide fast access to cash for urgent financial needs. They usually have repayment terms ranging from a few weeks to a few months, and loan amounts typically start at £100 up to £1,500.

Because of their speed and convenience, interest rates are higher than traditional bank loans. That’s why the Financial Conduct Authority (FCA) regulates costs, with caps on daily interest and repayment charges.

See also: Payday Loans UK – Pros, Cons & Safer Options.

Key Features of Short Term Loans

• Fast approval and direct funding into your bank account

• Short repayment terms, often tied to your next payday or within 3 months

• Higher interest rates than long-term loans

• Best used for emergencies, not long-term borrowing

👉 For impartial guidance, see Citizens Advice – Borrowing Money.

How Do Short Term Loans Work?

• Apply online – provide personal, financial, and employment details

• Get a decision – many lenders respond within hours

• Receive funds – same-day transfer possible with direct lenders

• Repay on time – either in one lump sum or via instalments

See our guide: How to Choose an Emergency Loan Lender.

Types of Short Term Loans

Payday Loans

Repayable on your next payday, usually with high interest. The FCA caps charges to protect borrowers.
👉 See our guide: Understanding No Refusal Payday Loans UK.

Instalment Loans

Repayable over several months, offering more flexibility than payday loans.
👉 See also: Tips for Managing Payday Loans Effectively.

Other Options

• Cash advances – quick cash against credit lines, often high cost

• Title loans – secured against your car, with repossession risk

See also: Understanding the True Cost of Cash Advances.

Who Can Apply for Short Term Loans?

Eligibility varies by lender, but typically includes:

• Age 18+ (legal UK credit requirement)

• Proof of income (payslips or bank statements)

• Valid ID and proof of address

Some lenders offer bad credit short term loans, but these come with higher costs. Always check the FCA Register before applying.

👉 Explore: Understanding Payday Loan Eligibility Requirements.

Direct Lenders vs. Brokers

• Direct Lenders – fund loans themselves, faster approvals, direct communication

• Brokers – compare multiple lenders, may charge fees or take commission

Quick tip: Always confirm lenders and brokers are FCA-authorised.

Short Term Loans for Bad Credit

Some lenders specialise in short term loans for poor credit, focusing more on affordability than score. Options include:

• Direct lenders for bad credit

• No credit check loans (high risk – see Citizens Advice)

• Instalment loans with longer repayment schedules

👉 Related guide: Bad Credit Loans UK – Complete Borrowing Guide.

Costs, Fees, and Interest Rates

• Interest rates – capped by the FCA to prevent excessive costs

• Additional fees – late payments, application fees, or early repayment penalties

• Repayment terms – short windows make careful budgeting essential

👉 See also: Understanding the Risks of Payday Loans.

Pros and Cons of Short Term Loans

Benefits

• Same-day or next-day funding

• Simple applications, often online

• Useful for emergencies

Drawbacks

• High interest compared to mainstream loans

• Short repayment terms can be tough on cash flow

• Risk of debt if repayments are missed

See our related guide: Alternatives to Quick Cash Loans Explained.

Tips for Choosing the Best Lender

• Check lender reputation (reviews, ratings)

• Ensure transparent fees and no hidden costs

• Confirm authorisation via the FCA Register

• Evaluate customer service responsiveness

👉 Explore: Everyday Loans – Are They Right for You?.

Responsible Borrowing

• Borrow only what you need

• Understand the total repayment cost

• Plan repayments before applying

• Choose FCA-authorised lenders

For debt advice and support, see:

• StepChange Debt Charity

• National Debtline

• Citizens Advice

👉 For more options, see our full guide: Alternatives to High Acceptance Payday Loans Explained.