Frequently Asked Questions

UK lenders and credit providers must make sufficient checks to ensure a loan is affordable. This will often include a credit check at some point during the application process. A credit check will show a lender if you have a lot of outstanding debt and late payments, or if you're potentially experiencing financial difficulties. It's likely other checks will be performed - for example a short term lender may request bank statements to check you have enough coming in to pay for your current bills and make the loan repayments.

Applying for lots of loans or other forms of credit in a short period of time can have negative consequences on your credit rating. However, some lenders will initially offer a “soft credit check” before performing a full credit check and lending money to you. Soft credit checks will be able to predict with some accuracy whether or not you will be accepted for a loan. Soft checks don’t have an impact on your credit score.

You can find more information on credit searches in our guide: hard credit checks vs soft credit checks.

There are some lenders who will lend to people with bad credit. However, it is important that you understand the lender’s acceptance criteria before applying for a short term loan, to prevent your credit score being negatively impacted if you apply and are rejected.

This depends on each individual lender (although there are caps on the amount of interest and fees that can be charged by lenders) and the amount you want to borrow. Interest rates are capped at 0.8% per day, or 80p for every £100 borrowed per day. The most you can pay for a high cost short term loan is capped at 100% of the amount you originally borrowed. So, if you borrowed £200, then the most you’ll ever payback for that same loan is £400 - this includes late payments. You can compare short term loans on MustCompare and use our loan calculator to see how much you'll each month and the total cost.

Responsible lending means that lenders can only lend to you if they are satisfied that you can afford to pay the money back. Lenders are therefore required to make the necessary checks - these include credit checks and affordability checks - to ensure their customers can pay back a loan.

Repayment term (or loan period) is the time over which you repay a loan to a lender. For example, small 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.

Short term loans are often referred to as quick loans and known for their quick approval process. Normally they are quicker than larger personal loans with money often paid on the same working day, but timescales will vary depending on the lender and on your circumstance. For example, you may have a thin credit file with very little information. A lender may need to perform additional checks and may request more information, such as bank statements, proof of address or employment. These additional requests for more information and checks may delay a decision on your application.