A Guide to Short Term Loans

If you’ve ever had a friend who doesn’t pay back a loan, then you may sympathise with a recent survey. Research from Barclays Bank shows that the amount of unpaid debt owed to friends stands at more than 2 billion pounds in the UK. Borrowing from a friend is certainly a lot cheaper than taking out a loan with a bank or lender, but as the survey shows, only half ever pay it back. Of course, borrowing from a friend will save you money on interest, but not repaying can also cost you a friendship. 15% of those surveyed, said that they had argued with or lost friends over the debt.

So if you don’t want to jeopardise a friendship, what are your borrowing choices? We’ve outlined the different types of short term loans open to you.

Bank Loans             

Borrowing from banks isn’t as easy as it used to be, but if you have a good credit record, you do stand a reasonable chance.  See what your own bank can offer you, or go online to find and compare the most current cheapest interest rates.


An authorised overdraft can be a good short term borrowing option, but again, this depends on your income and credit rating. Never go over your overdraft limit without permission from your bank as this can be very expensive.

Credit Card

This can be useful for short term borrowing but paying it back at the end of the month is important to avoid high interest charges.

Payday Loans

If you cannot borrow elsewhere, minimise the possibility of creating more expensive debt by following these rules:

Borrow less than your actual salary so you have something to live on once you have repaid the loan

Pay it back as soon as your receive your salary

Always refuse to extend the length of the loan, even if the loan company offer you the choice to do so.

Online Loans

There are plenty of these around, offering fast pay outs on unsecured loans. These are applied for online, and so are processed quickly. Some, such as logbook loans, are specifically for those with bad credit, and can be very expensive.  So always compare the cost of the loan by finding out the ‘Total Amount  Repayable’ which tells you how much you will actually repay. This is often a more useful guide than the APR rate in the case of short term loans. Also be sure to check the small print for any