Money Talk: Short Term Loans | Money & Finance Tips

Money isn’t spoken about that much. It’s whispered behind closed doors or alluded to in off-hand comments, but talking about finances is healthy and helps to ensure that everyone knows what help and support is available. Particularly as parents, finances can be difficult to manage so talking about money is important.

Short term loans are one way you might choose to borrow money when you’re in a sudden financial pinch. is a FCA authorised and regulated direct lender with whom I’ve teamed up to bring you this post about short term loans so we can all get talking about money.

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What Are Short Term Loans?

A short term loan is a way to borrow money over a short period and is particularly useful when you need cash quickly to cover a sudden expense which you couldn’t have predicted and therefore didn’t budget for. They’re designed to provide emergency money when you’re in a fix.

There are two types of short term loans: payday and instalment loans. They both offer instant cash, but vary in the way they’re paid back. 

Payday loans are paid back in one single repayment on the date agreed between you and your lender. This is within 36 days, intended to be paid back after payday — hence the name.

Installment loans are paid back over the course of a few months, in several separate installments. This is usually three months, but can sometimes be as much as six, depending on the lender.

When Are Short Term Loans Useful and when shouldn’t they be used?

Not everyone should get a short term loan. In fact, most people shouldn’t, but there are circumstances in which they’re very useful and might be the best choice for you. It’s important to understand what these circumstances are (and aren’t!) so you can make informed decisions about your finances.

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To Cover An Emergency

Yes, this is the most common use for short term loans. If your car breaks down and you need it to get to work, when your toilet suddenly stops flushing or your boiler needs repairing – sudden costs can come up for which you can’t plan. Payday or instalment loans are a good way to pay for things you haven’t got any budget for and need fixing now.

To Pay For A Holiday

No, short term loans shouldn’t be used for luxuries or things that you can save up for yourself. If you’re looking to pay for a holiday, a new TV, a day trip or a meal out, then you should look at alternatives like changing the way you manage your budget.

Before A New Job

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This is another way that a short term loan could be useful. If you’re just starting a new job and need money for transport, for example, then a payday loan could give you an advance on your first paycheck so you can cover the first month of transport and pay it back on your first payday.

When You Can Wait

If you can wait to make a payment, then you should. If it’s a non-emergency repair or a cost that isn’t pressing, then don’t take a short term loan, but wait until your next payday. It might be frustrating not to get something fixed straight away, but it’s better to not have to pay interest on borrowing money, or have the record of the short term loan on your credit file, if you can help it.

To Pay Monthly Bills

While an instalment or payday loan can be a helpful way to pay for an unexpected bill, they shouldn’t be used as a regular way to pay your monthly bills or any kind of regular payment. If you become reliant on short term loans, then you should get professional financial advice as it can lead to serious money problems.

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Short term loans do have a lot of benefits, particularly when you need cash quickly, but you should be sure to only apply for a loan when you need one and know that it’s the best choice for you. If you’re not sure whether you’ll be able to pay the loan back on time, then you should get financial advice instead of applying so you don’t end up in more financial difficulty. The Money Advice Service is a free service that could help you.

If you’re looking for a short term loan, or want more information, then is an FCA regulated and authorised direct lender.

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