Are Short Term Loans Better than Longer Term Loans

There are lots of different types of loans to choose from and it is therefore not confusing that there could be some confusion over which loan might be the most suitable for us. There are lots of different lenders as well and we will have heard of some types of loans and lenders and not others. We can tend to opt for using lenders that we have heard of as well as loan types that we are familiar with because we know what to expect from them. However, this does limit our options because we will not be open to try all of the loans or even considering them. One set of loans which is very often ignored is short-term loans. These can be compared to longer term loans in order for you to decide whether you feel that they will be a good choice for you. It is a good idea to have a good understanding of the difference between them so that you can decide which might be the best type for you.

Credit rating

Short-term loans are often made available to those people that have poor credit ratings and therefore may not be accepted for other loans. That is not to say that those with good credit ratings are not allowed them, but they do open doors for those who might think that they otherwise would not be able to borrow money. Although they have to do a credit check, they will usually not have many rules on who they will pick apart form checking age, ID, that they have some sort of income and that they have a UK bank account as well as living in the UK. Other than that, they will normally not worry about much else and lend to most people that apply.

Quick to arrange

A short-term loan is usually really quick to arrange. This is because they will act fast on your behalf. Many short-term loans came about because people needed money in an emergency and so there was an understanding that they would have to be arranged quickly in order to fit this requirement. Short-term lenders will therefore often be able to organise loans 24/7 so there are no worries about waiting for business hours. They will also arrange them quickly, possibly in a few hours but they will not normally take more than a few days at most. If you do need money really quickly, then it is best to check with the lender to find out how long it is likely to take as you may find that some lenders will be much quicker than others to provide you with the money that you need.


The repayment term refers to how long it will take to repay the loan. As short-term loans are often for smaller amounts of money, then they will be repaid quickly. This is a big advantage for those people that do not like being in debt and would rather get out of it as quickly as possible. It will also be useful if you know that you will need to spend a big amount of money in the near future and you want to be free of debt by then.


The repayments can be different to a standard loan. With some short term loans you will make one large repayment and then the debt will all be cleared really quickly. With others you will make regular repayments. This is different to some more traditional loans where you might pay regular repayments but you may also make just a minimum payment of interest and repay the rest when you have the money available such as with an interest only mortgage or a credit card. Different styles of repayment suit different people and so it is good to be aware of the different options do that you can choose something that will suit you.


The cost of loans really varies. Short-term loans are known for being expensive but this can depend on what you are comparing them to. If you only hold a loan for a small amount of time then you will not have to pay so much in interest compared with a loan that you hold for decades, such as a mortgage. Although mortgage interest is lower, as you pay it for so long, when you add up the amount that you have paid it will be much bigger. So, make sure that you calculate how much you will be paying in costs and this will allow you to compare properly.

As there are so many differences, it can be really worth understanding all types of loan and then when you do need to borrow money you will be able to make an informed decision as to which will suit your needs the best. You may have a feeling about which will be best but unless you understand all of the options you may find that you are paying out more than necessary.

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