What is a short term loan?

A short term loan is a type of unsecured credit repayable over a term of up to 12 months. Short term loans are available from a number of online lenders and can help customers who may experience sudden or unavoidable financial difficulty, such as unexpected home maintenance and car repairs or those who are looking for a short term solution for their temporary cash needs, such as a change of employment and the associated change in the regular payday date.

The features of short term loans

The amount borrowed is usually relatively small (in most cases it is less than £1,000) but short term loans tend to come with high interest rates which vary from one lender to the next. It is therefore usually a good idea to compare a number of lenders to help find a short term loan that offers the best value for you.

Higher interest rates charged by companies operating in this market have often raised eyebrows in the media and among the wider public but it is important to remember that the lenders need to recover their operating costs from a much smaller loan principal than mainstream credit providers, such as banks. High street banks are able to lend at lower rates but they tend to do so for much bigger amounts, often for longer periods of time and usually only to people with a long and stable credit history.

Online short term loans can therefore be a useful financial product for individuals who borrow responsibly and remember to budget for loan repayments.


The advantages of monthly repayment

Short term loans require monthly repayments in instalments, so while the total amount that needs to be repaid is usually higher than shorter duration payday loans of the same amount, the individual repayment sums are smaller each month than when making a one off repayment. This ability to spread the repayment over a number of months may therefore be a more manageable solution for you as a borrower depending on your individual financial circumstances. Monthly repayments have two key advantages:

  1. They ease your financial planning. You do not have to pay back one lump sum, relieving some of the stress which comes with taking out a loan in the first place and this additional financial flexibility could be worth the extra cost of a longer dated short term loan;
  2. They are spread out giving you more time. Some online lenders can even begin the repayments on the date you select giving you control on when and over how many months the loan will be repayable over to further suit your financial circumstances.

The advantages of online loans

One of the main benefits of online loans is the fast and convenient application process. Time is often very important and applying for a short term loan online usually means the money will be with you within hours, and sometimes minutes, of your application being approved. You also do not have to go to a bank branch in person. Visit your chosen lender’s website to apply for a loan, submit your application and, if you meet their creditworthiness and affordability assessment, simply wait for your cash to arrive in your nominated bank account.

Most lenders will let you submit the whole application directly on their website, with no need for branch visits or sending any documents by post. Once submitted, your application is checked as quickly as possible and, if your application is approved, the money is sent directly to your nominated bank account. Transfer time is therefore another criteria that many borrowers would look at when trying to compare short term lenders.

The services that we provide

clearandfair.co.uk is an unbiased loan comparison site. Our approach includes:

  1. comparing direct lenders who offer short term monthly instalment loans online to show you who offers the lowest repayment over the time period you select;
  2. listing lenders based on the total amount that needs to be repaid to settle the loan with lower interest rate lenders offering the cheapest loans always listed at the top of the comparison table.

Lenders whose loans you can compare on our site cannot pay to be promoted in the results table meaning the results of your short term loan search are always ranked only on the price that borrowers have to pay.

The role of FCA in regulating short term loans

The Financial Conduct Authority (FCA) took over the regulation of High Cost Short Term Credit in the UK in 2014 and put a number of regulations in place to improve consumer outcomes, for example a maximum default charge of £15 for missed payments and a total cost cap of 100%, meaning a borrower will never pay more than double the amount that was borrowed to settle the loan.

There have been a number of reports since the FCA took over of savings for consumers as a result of these new regulations introduced by the FCA but the interest rates and repayment amounts can still vary from one lender to the next. Loan comparison sites offer a good way to check multiple lenders in a quick and efficient way.


At Clear And Fair we only list FCA authorised and regulated lenders on our website so when you apply for a short term loan with one of our lenders you can do so in the knowledge that they all must comply with established regulations to allow fair and affordable repayment of their online loans taken out by consumers.