Short Term Loans – Apply With Little Loans

Life can be unpredictable.
From a broken boiler to a car that suddenly refuses to start, sometimes we’re hit with unexpected costs. When savings don’t quite cover these inconveniences, you might think about searching for a short-term loan to keep you afloat.

What is a short term loan?

A short term loan is a personal loan that usually consists of a low amount and a short repayment period.

How much money can I borrow, and over how long?

Little Loans is a credit broker, and we work with a trusted panel of lenders who offer loans from £100 to £10,000, which can be repaid between 3 and 60 months, depending on the amount you apply to borrow.
Always make sure that you are able to afford your monthly repayments – which will include interest - and never borrow more money than you need.

What is the difference between a short-term loan and a payday loan?

Payday loans are a certain type of loan designed to tide you over until the next time you are paid. They usually require full repayment within a month and tend to come with higher interest rates.
Short-term loans offer a variety of repayment terms, usually starting at 3 months. Spreading the cost of your loan by repaying it over a period of time may make your monthly repayments more manageable.

Things to think about before applying for a short-term loan

• Applying for a loan is not a decision that should be taken lightly. Before you make an application, you should give yourself some breathing space and explore any other options that may be available to you. We’ll have a look into some short-term loan alternatives further down the page.


• You should never apply to borrow more money than you need or can afford to repay.


• Have a think about the different loan terms available. While it offers more time to spread the cost of borrowing, a longer term will cost you more in interest. You’ll need to repay a shorter term quicker, and your monthly repayments will be higher, but you’ll pay less interest overall.

Using a credit broker vs using a direct lender

If you’re thinking about looking for a short-term loan, you might have asked, ‘what’s the difference between a direct lender and a credit broker?’.
The table below explores some of the key differences.

Who can apply for a short-term loan?

To search for a short-term loan with Little Loans, you must:

• Be aged 18 or over;
• Be a UK resident;
• Have a UK bank account and valid debit card; and
• Have a regular source of income paid into your bank account.

Can I apply for a short-term loan with a poor credit rating?

While having a poor credit rating may make it harder for you to be approved for a short-term loan, it may not be impossible. There are certain lenders on our panel who specialise in loans for those with bad credit. Please bear in mind that loans for those with a lower credit score could come with higher interest rates. You may not be able to borrow as much money as you need to.

Before you commit to any financial product, it’s important to consider the cost of monthly repayments. Falling behind on or failing to make your repayments can lead to additional fees, financial stress, and a further decline in your credit rating.

I have no credit history; can I apply for a short-term loan?

Sometimes, your credit rating might be low because there is simply no credit history available for you. This may be the case if you have never borrowed credit or you are a young adult and haven’t paid bills before.

It may still be possible for you to be eligible for a short-term loan with little-to-no credit history. However, to better your chances of approval, you may wish to boost your credit score first.

Some of the lenders on the Little Loans panel are willing to consider applications from people with no credit history, although please be aware that if you are approved for a loan, you may be offered a higher rate of interest.

I’m unemployed; can I apply for a short-term loan?

When reviewing applications, lenders will pay particular attention to your income and employment status. Being in receipt of a regular income suggests that you are more likely to be able to manage and keep up to date with the monthly repayments on your short-term loan.

Some lenders may consider certain benefits as a source of regular income. You can read more about loans for those who are unemployed here.

How much will a short-term loan cost?

The Annual Percentage Rate (APR) is the annual cost of borrowing credit, and includes your selected repayment term, interest, and any standard fees associated with the loan. The lower the APR, the lower the cost of borrowing.
The interest rate you’re offered will depend on several things, including your credit history and income, and will be decided upon the result of the lender’s creditworthiness assessment.

You’ll repay your short-term loan in monthly instalments, which could be made either by Direct Debit or continuous payment authority (CPA).

You should always ensure that the lender you apply with is authorised and regulated by the Financial Conduct Authority (FCA). You can check to see whether a direct lender appears on the FCA register here.

How can I improve my credit rating?

Improving your credit rating could increase your chances of being approved for credit in the future.
There are a number of things that you can do to improve your credit rating.

• Check your credit report carefully. Noticed a mistyped postcode or address? Believe it or not, this could be negatively affecting your credit score.


• Sign up to the electoral register. This makes it easier for lenders to identify you at your present address.


• Be aware of how financial association could affect your credit score. For example, if you share a joint bank account with somebody who has a low credit rating, it’s possible that your own may suffer as a result.


• Ensure all of your bills and existing credit commitments are paid on time.


• When you apply for a financial product, the lender will run a hard search on your credit history – too many hard searches over a short period of time can have a negative impact on your credit rating.


• If you have a credit card, avoid using it to withdraw money from a cash machine. This is known as a ‘cash advance’ and may suggest poor money management, particularly if multiple withdrawals are made over a short period of time.

How does the short-term loan application process work?

Little Loans is a broker, not a lender.
We have summed up our journey in five simple steps below.

1. Select how much money you would like to borrow, over how long. Complete our online application – this should take no longer than 5 minutes. Please be sure to answer all questions as accurately as you can - the information provided will determine the outcome of our check.

2. Once you have completed the application, you can take a breather while we get to work. We will scan our panel of lenders to see if we can match you to a suitable short-term loan. Our soft search eligibility check will give you an idea of how likely you are to be approved for a loan without impacting your credit rating.

3. It’s a match! If our eligibility checks reveal that you have been pre-approved for a short-term loan with one of our trusted lenders, you will be automatically redirected to their website. They will guide you through the rest of the process.

4. The lender may require some additional information from you, such as a payslip or proof of address, and you will be sent a loan agreement. You should read this thoroughly. Happy? You can go ahead and sign the agreement.

5. The lender will then run a creditworthiness assessment using your details. It’s worth remembering that a hard search will show on your credit history. If the lender approves your application for a short-term loan, your money could be sent the same day.**

Short-term loans: what’s good about them?

While it’s important to bear in mind that a short-term loan won’t be a suitable option for everyone, it could provide a way for eligible applicants to access credit when they need it the most. As discussed, some UK-based lenders specialise in loans for people with poor credit history. Some of these lenders use Open Banking technology, which, with your consent, allows them to access your online bank account and take a read-only look at your recent financial activity.

With a range of repayment terms to choose from, a short-term loan enables approved applicants to spread the cost of borrowing, which could make monthly repayments more manageable.
Some lenders may offer an early repayment option, which will allow you to clear the balance of the loan before the term comes to an end. Please note that you may be charged an early repayment fee, depending on the lender.

Are there any alternatives to short-term loans?

If a short-term loan isn’t the right option for you, you might wonder if there any alternatives in the event of an unexpected expense relating to either a life or family emergency.

• Use your savings. Dipping into our hard-earned savings can feel really disheartening, but you may wish to make this your first port of call when faced with a financial emergency. Using your savings instead of taking out a loan will mean that you won’t pay interest.


• Is there a possibility that you could borrow money from a friend or family member? A loved one might agree to provide the funds at a lower interest rate than a high street lender, or they could offer you the money with no interest at all. Borrowing money from somebody you know can be risky, and if not handled sensitively, could harm your relationship. You should both agree on a repayment plan and get it in writing if possible.


• While this will of course take longer, could you save up the money you need instead? This won’t be a practical solution for every situation, but if your expense isn’t urgent, you may wish to take a step back, save up the money, and avoid interest.

What happens if I struggle to make the repayments on my short-term loan?

When faced with this situation, it can be tempting to bury your head in the sand, but please don’t suffer in silence.
If you are unable to make your pre-agreed monthly repayments, you must contact your lender as soon as possible. There may be things they can do to help.
The sooner you seek help, the sooner you can take the first steps towards regaining your financial control and confidence.

Little Loans has teamed up with debt charity StepChange to provide a free, online quiz that you may find useful. You can take the quiz  here, with no impact to your credit rating.
You can also access free, confidential debt and money management advice through the following organisations: Citizens Advice, National Debtline, and MoneyHelper.

*Please be aware that if you choose to make a full application directly with the lender, a creditworthiness assessment will be carried out. This could include a hard search.

**The time it takes for the money to appear as available in your account will depend on your bank’s policies and procedures.