Short Term Loans
With a short term loan, you borrow money from a lender over a short period of time. Whether you want to renovate your home or pay for a wedding, at Asda Money we help you find the right loan for you from across our panel of lenders – from one to seven years.
Here we’ll focus on exactly what short term loans are, how they work, and whether it’s the right choice for you.
Why choose Asda Personal Loans?
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A loan offer that’s right for you and your circumstances
What are short term loans?
Short term loans are personal loans. You borrow money from a lender and agree to pay it back in full (plus interest) over a shorter term – say 12 months.
At Asda Money, we help find the right loan for you from across our panel of trusted UK lenders. Our lenders offer loans from £1,000 to £25,000 over one to seven years.
What is the shortest loan term?
Some lenders may offer you short term loans over just one month, whereas others provide loans with a minimum period of a year or so. At Asda Money, we work with a panel of trusted UK lenders. Our lenders offer loans with a minimum repayment term of 12 months.
You’ll need to pay interest on the monthly repayments and this will likely be at a higher rate than a longer term loan. Lenders view short term loans as higher risk, as there’s more chance of someone defaulting on one, which is reflected in the increased interest rate. By agreeing to a shorter period to pay it back, your monthly repayments will also be higher than a longer term loan for the same amount. But the shorter the term, the less you’ll pay in interest overall.
The right loan for you comes down to the cheapest way to borrow the money you need over the shortest term possible with monthly repayments you can afford.
What can I use a short term loan for?
Many people take out short term loans to help cover the cost of their wedding, to make home improvements, or put it towards a new car. You may also consider a short term loan if you have existing debts and want to consolidate them into one monthly payment.*
*Please remember that by consolidating existing borrowing, you may be extending the term of the debt and increasing the total amount you repay.
How much can I borrow?
At Asda Money, our panel of lenders offer loans from £1,000 up to £25,000. How much you can borrow will depend on your personal circumstances. Lenders will look at a range of factors when considering your loan application, including:
- Your income: Whether or not you can afford to make the monthly repayments
- Your credit score: A good credit score indicates you can borrow money responsibly and aren’t a risk to the lender
- Why you’re applying for the loan: For example, whether you’re using it to consolidate debt
Remember, when borrowing over a shorter term, your monthly repayments will be higher than a longer term loan. Use our helpful loan calculator to understand what you could potentially borrow and how the length of the loan affects the monthly repayments.
How are short term and payday loans different?
Payday loans are a type of short term loan, but they work a little differently. A short term loan is a personal loan you borrow from a lender and pay back over a defined period of time, say 12 months. You effectively spread the cost of the loan over a number of months.
A payday loan on the other hand is designed to be repaid in one lump sum with your next paycheck. Payday loans also tend to be for lower sums – usually around £1,000 or less – and the interest rates are often higher than short term loans as they are designed to be paid back in a month or less.
Alternatives to a short term loan
Before you apply for a short term loan, consider any other potential alternatives:
Credit card: If you need to borrow a smaller amount over a short period of time, a credit card may be a more suitable option. You can earn rewards when you spend on a credit card, and if you pay it back in full each month you won’t pay any interest.
Borrowing from family or friends: If you have a loved one who is willing to lend you the money you need, you won’t need to go through the process of applying for a loan. That means no credit check and no impact on your credit score. And depending on the agreement you have, you may not need to pay interest either. It’s good sense to draw up a loan agreement before you borrow the money with clarity on the amount being borrowed and the repayment term.
Saving up: If you want to borrow a smaller sum of money, it makes sense to delay your purchase and save up. Put aside the money you would have paid back each month into savings instead and you won’t go into any debt at all. You also won’t need to pay interest, making it a more cost-effective option.
We’re here to help
At Asda Money, we work with a panel of carefully selected and trusted lenders, that could provide you with a personal loan that matches your borrowing needs across a term that works for you.
We search our lender panel and list a range of offers that meet your requirements. One simple eligibility check, and you’ll get offers from some of the best UK lenders on the market. Then it’s a case of comparing and finding the right one for you before completing a full application.
We can also help you understand how to better manage your finances with our Financial Support.
Top Personal Loans FAQs:
- Why choose a Personal Loan?
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Asda have partnered with Aro, who are a leading credit broker. This means customers can get access to a carefully selected lender panel who provide personal loans.
- How does it work?
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With one simple check, you can search Aro’s panel of selected lenders to see what loan options you have. Once you’ve been approved you will receive your funds, which in some instances could be on the same day.
- How much can I borrow?
- Will applying affect my credit rating?
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No. One of the best things about our service is you get access to a panel of trusted lenders with no hard credit footprint left on your credit file. When you apply with us, a soft search is completed which doesn’t harm your credit score.
However, if you do proceed with an offer from your search with us, the lender will complete a hard search. This will show on your credit file.
- What credit score do I need for a bank loan?
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Strictly speaking, there is no minimum credit score for you to be approved for a personal loan. If you have a strong credit score, more lenders may be willing to lend to you with better interest rates on offer. If you have a lower credit score and have had problems borrowing in the past, you may find a smaller pool of lenders are willing to lend to you. You may even have to look for a specialist lender that offers loans for bad credit.
- Can I get a loan with a CCJ?
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If you have a county court judgement (CCJ) against your name, you may struggle to get a personal loan with mainstream lenders. However, you may find specialist lenders that are willing to lend to you.
- Can I borrow money with bad credit?
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If you have bad credit or have had money problems in the past, you may find that some lenders aren’t willing to lend to you. Those that are may only do so with higher interest rates. It’s worth looking at specialist lenders for bad credit loans. Or you can work on your credit score to improve it before applying for a loan.
- Why won’t my bank give me a personal loan?
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Lenders look at a variety of factors when deciding on whether or not to offer you a loan. They each have their own criteria which will take in your credit score, job, monthly income and more. If you have been rejected by a lender, you can always ask them why and hope they will give you some insight into their lending criteria. They may direct you to one of the main three credit bureaus to find out more information
- Can I borrow money with a poor credit score?
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If you have a poor credit score or have had money problems in the past, you may find that some lenders aren’t willing to lend to you. Those that are may only do so with higher interest rates. It’s worth looking at specialist lenders for bad credit loans. Or you can work on your credit score to improve it before applying for a loan.
- How to get the lowest rate for a personal loan?
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The interest rates offered by lenders depend on a range of factors including how much you’re borrowing and the length of the loan. They will also look at your credit score. To help get a lower rate, you can look to improve your credit score by signing up to the electoral register, closing old accounts, checking for any errors on your report, and paying all your bills on time. You may also consider increasing the length of the loan or borrowing less.
- Can I take out a loan if I already have one?
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Yes, you can. When you apply for a new personal loan, lenders will look at your existing borrowing to see if you can afford the second loan. Many people choose to take out a new loan to consolidate existing borrowing – whether loans or credit cards – into one loan with a single monthly repayment.
- If I already have bad credit, what could this mean for my application?
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When you apply for a personal loan with a lender, this will show up on your credit file. Your credit score may take a very small hit in the short term once you take the loan out. But if you pay your monthly payments on time and in full, this can have a positive impact on your credit score.
About our trusted provider, Aro
Asda is in partnership with Aro which is a trading name of Aro Finance Limited. Both Asda Money and Aro are credit brokers, not lenders. We offer our customers a different solution to borrowing money and finding a loan.
We work alongside Aro so we can provide our customers with their very best loan offer from a panel of handpicked trusted lenders.
With one simple eligibility check, our panel of lenders can provide you with a loan tailored to your needs. It’s also a safe way to find a loan without negatively affecting your credit rating.
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ASDA Money is a trading name of Asda Financial Services Ltd who are an Introducer Appointed Representative of Aro who are authorised and regulated by the Financial Conduct Authority. Aro acts as a credit broker and not as a lender.
Terms and conditions apply. UK residents aged 18 and over. If you take out a loan, Asda Money and Aro receive a commission payment from the lender. Different amounts of commission are received from different lenders and the amount will be either a fixed amount or a percentage of the amount you borrow and dependent on the lender you select. We will not charge you a fee for our services.