When Do Short Term Loans Make Sense?

The birth of short-term lending has significantly improved one’s chances of handling unexpected financial emergencies. While there are many people who might cringe at the idea, there’s still a larger market which these loans cater to.

In my own experience, short term loans can be very helpful, at least in situations when you don’t have many options. When I had to borrow quick cash and had nowhere else to go, short term loans were the only logical solution I could think of. Here are just some of the reasons why short term loans might be appropriate for your particular situation.

Short repayment period. As the term suggests, these loans are meant for short-term borrowing, usually between 2 and 12 months. This means that you don’t have to count the years before the loan period is over, as long as you pay off your monthly dues in full.

Flexible terms. Short term loans tend to have more flexible payment terms as compared to their long-term counterparts. You get to choose when to make your payments and how much you can afford every pay date. Many short term lenders will also allow you to pay off your loan amount in full, thus freeing you of the debt more quickly.

Readily available. Short term loans are a perfect solution to those who are looking for a quick cash fix. These loans typically have instant approval and the money is released within 24 hours. Usually, there are no credit checks involved, which means less hassle on your part.


Helps rebuild your credit score. In the event that you have a low credit rating or have yet to start building your credit history, short term loans can help with your credit worthiness. If you borrow a small amount and pay it off quickly, this should appear as a positive entry in your records, increasing the likelihood of you getting approved in your future loan applications.

However, short term loans are not without their disadvantages. Here are some of the things to remember before deciding if these loans are right for you.

High-interest rates. Short term loans are often criticised for their notorious interest rates. Because the repayment period is relatively short, the borrower makes up for it by paying more in interests.

Limited borrowing capacity. Because most of these loans cater to poor credit borrowers, lenders do not usually release much cash.

You can lose your collateral. Certain types of short-term loans, such as logbook loans, are secured against your asset. If you are not careful, you could end up with lots of debt and a seized property.

They can turn into a debt cycle if you’re not careful. Because short term loans are easily available, there’s always the temptation to run to them each time you face financial difficulties. This could leave you in a never-ending cycle of borrowing.



A short term loan can be subject to use and abuse. But in my own opinion, the existence of short term loans can mean the world to a responsible borrower. We all experience financial crises from time to time, and a small, short term loan can leave us room to breathe and solve our problems quickly until we can get back on our feet again. Certainly, in the United Kingdom, these loans are becoming far more popular.