Frequently Asked Questions

Repayment term (or loan period) is the time over which you repay a loan to a lender. For example, short term loans are usually less than one year and personal loans are generally one to five years. During your loan period you will need to make regular repayments to the lender as agreed until the end date, by which your loan balance should be paid in full.

APR (Annual Percentage Rate) is the total cost of your borrowing for a year and it includes the fees and interest you’ll pay. The Financial Conduct Authority requires lenders to display the APR for all loans. Using the same, standard calculation helps make it easier to compare loans. Think of it as a way of comparing loans on a level playing field, on a like for like basis.

There are also other factors that matter when comparing short term loans. For example, it's helpful to look at the total amount you will need to repay each month, and the overall cost. Before applying for a short-term loan, make sure you feel comfortable with the monthly instalments, and they are realistic for your financial situation.

Failing to pay back money owed can have a serious impact on your credit score, which may affect your ability to get credit in the future.  If you fail to pay back a secure loan, you may lose the asset or assets you used as security for that loan.

If you think that you won’t be able to keep making payments to an existing loan, the first thing you should do is to get in touch with your lender as quickly as possible, preferably before a payment is missed. UK lenders are required to assist you with a realistic payment plan if you are struggling. Missing a payment may mean your details are passed to collection agents to call you and that could make the situation more stressful, so it’s better to contact your lender before defaulting.

If you are struggling to repay your debts, some charities and organisations may be able to help, such as Citizens Advice, Step Change, and The Money Advice Service. As with any financial difficulties, the sooner you act, the sooner you can get help.

Most eligibility requirements that apply to short term finance apply to other forms of credit too. Usually, you must:

• Be 18 or older and a UK resident
• Have a regular form of income (some minimums may apply)
• Have proof of address (often for the last three years)
• Have a UK bank account
• Provide your email address and a valid UK mobile phone number
• Not be bankrupt or have CCJ
• Pass affordability checks, credit checks and other checks a lender may perform

You may also be asked for additional information, including bank statements, and proof of employment.

A secured personal loan is where you borrow money against the value of an asset, such as your home or car. In the case of a secure business loan, assets can include property, machinery, materials and furniture. Because of the risks involved, you should think very carefully before choosing to apply for one. If you fail to keep up with payments on a secured loan, the lender can apply to sell your asset or assets to pay back the loan. Secured loans are often for higher amounts than unsecured loan (upwards of £25,000), with the money being borrowed over a longer period of time (usually from 5 to 25 years).

You should contact your lender as soon as possible and ideally before failing or delaying any of your repayments. They may rearrange your payments to make the debt more manageable for you.

Before you apply for a short term loan or any credit for that matter, you should be confident that you can afford the repayments. Failing to pay back a short term loan on time can damage your credit score and potentially affect your ability to get credit in the future, and cause you unneeded stress.

If you are still struggling or need help, you can contact Citizens Advice, Step Change, and The Money Advice Service.

An unsecured loan lets you borrow money without having to provide any assets (such as your home) as collateral (something you offer as security if you fail repayments). Unsecured loans are usually available to persons with fairly good credit scores, which will reduce the risk to the lender. The decision made by the lender as to whether or not to agree to the loan is based on their assessment of the customer’s ability to pay back the loan. Generally the better your credit rating, the more likely you are to be approved for an unsecured loan.