Emergency expenses often come out of nowhere. Whether it’s a broken boiler or an urgent car repair, sometimes you might need to find extra cash quickly. A short-term loan can help you cover essential costs, provided the repayments are affordable within your budget.
In this guide, find out how they work, what you might use them for and how they compare to other options like payday loans and long-term loans.
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- Key takeaways
- What is a short-term loan?
- How do short-term loans work?
- Why do people need short-term loans?
- Are short-term loans a good idea?
- Types of short-term loans: Personal vs payday
- How much can you borrow with a short-term loan?
- Apply for a short-term loan with QuidMarket
Key takeaways
- Short-term loans are designed to be repaid over a relatively short period, typically a few months rather than several years.
- People often use short-term loans to cover unexpected expenses like car repairs, household emergencies or temporary cash-flow gaps.
- While these loans offer quick access to money, it’s important to check the repayments are affordable and understand the total cost of borrowing.
- At QuidMarket, you could apply to borrow between £300 and £1,000 if you’re a new customer and £400 and £1,500 if you’re a returning customer, with repayments spread over 3-6 months.
What is a short-term loan?
A short-term loan is a type of borrowing that you repay, plus interest, over a relatively short period of between a few months and a year. They’re commonly used to cover temporary financial needs rather than major long-term purchases.
The amount you can borrow varies depending on the lender and your circumstances. At QuidMarket, you can apply to borrow between £300 and £1,500, repaid over 3-6 months.
Short-term loans vs long-term loans
Short-term loans are designed to be repaid relatively quickly, making them suitable for temporary expenses or emergencies. Long-term loans, on the other hand, are typically repaid over several years and are often used for larger borrowing needs.
| Feature | Short-term loan | Long-term loan |
| Repayment term | A few months | Several years |
| Used for | Unexpected expenses, temporary cash-flow gaps | Larger purchases or major expenses |
| Monthly repayments | Often higher due to shorter term | Often lower as costs are spread out |
| Overall interest repaid | May be lower due to shorter borrowing period | May be higher due to the longer term of the loan |
How do short-term loans work?
The process usually works like this:
- Choose how much you’d like to borrow.
- Complete an application with your personal and financial details.
- The lender assesses your application, including affordability and credit checks.
- If approved, you’ll receive a loan agreement showing the repayments and total cost.
- You’ll repay the loan amount, plus interest, through scheduled instalments over the agreed term.
Why do people need short-term loans?
Short-term loans can cover emergency or essential expenses when you don’t have enough money available immediately. Common reasons include:
- Emergency car repairs
- Essential home repairs
- Replacing broken household appliances
- Covering temporary gaps between paydays
- Unexpected bills or one-off expenses, like a vet bill
- Urgent travel costs
For many borrowers, the key benefit is being able to spread the cost over several months instead of repaying the full amount up front.
Short-term loans shouldn’t be a long-term financial solution, though. If you’re struggling with ongoing money problems, organisations like MoneyHelper, Citizens Advice and StepChange offer free, independent advice.
Are short-term loans a good idea?
That depends on your circumstances, so it’s smart to weigh up the advantages and disadvantages before applying.
Pros
- Quick access to money for urgent expenses
- Your repayments are spread over a fixed period
- Usually unsecured, so you don’t need to provide an asset like your home as security
- Application processes like ours are quick and easy to complete online
Cons
- Interest rates can be higher than longer-term borrowing options
- Monthly repayments may be higher because the term is shorter
- Missing repayments can cause you serious money problems and hurt your credit score
- Repeated borrowing can lead to financial troubles if you don’t manage it carefully
Types of short-term loans: Personal vs payday
Short-term personal loans and payday loans can both cover unexpected costs or gaps between pay checks, but they work differently.
| Feature | Short-term personal loan | Payday loan |
| Repayment | Monthly instalments spread from three months up to one year | Typically one complete payment, around your next payday |
| Loan amounts | Usually higher | Usually lower |
| Interest charged | Usually lower | Usually higher |
For most people, a short-term loan repaid over a few months is more manageable than a payday loan repaid in one lump sum. Smaller, predictable monthly payments put less pressure on your budget, with less risk of missing a deadline and getting trapped in a cycle of debt as a result.
How much can you borrow with a short-term loan?
The amount available depends on the lender’s criteria and your financial situation. When reviewing an application, lenders typically look at:
- Your income
- Existing financial commitments
- Employment status
- Credit history
- Affordability of the repayments
At QuidMarket, new customers can borrow between £300 and £1,000, and returning customers from £400 up to £1,500, with flexible repayment terms of 3-6 months.
Remember that borrowing more than you need could increase the overall cost of credit. It’s sensible to apply only for the amount needed to cover your expense.
Apply for a short-term loan with QuidMarket
If you need extra cash to fill a gap, QuidMarket offers short-term loans up to £1,500 with flexible repayments over 3-6 months and no hidden fees.
You can apply online in just a few minutes. A member of our team will review your application if needed, rather than relying purely on an automated decision. If approved, you could see the cash in your account the same working day, giving you fast access when you need it most.
As an authorised lender, we’re committed to responsible lending and will only offer credit when we believe the repayments are affordable.
