It can be difficult to budget for every single cost that life throws at you. Whether you need to replace the washing machine, fix the car or have been hit with a utility bill that was bigger than you had anticipated, a six-month short-term loan could allow you to spread the payment. Unlike a traditional “payday” loan, repaid in one lump sum on your payday, these loans give you longer to sort out your financial situation by breaking repayment down into smaller instalments. Crucially, however, spreading repayment means paying more overall for a loan, so if you can possibly pay off the debt sooner, you should.
The good news is that you can often have your funds transferred the same day that you apply. The bad news is that high-cost, short-term credit involves extremely high interest rates, and being charged such high interest rates for six months makes these a very expensive credit option. There are alternatives. Before you take out a six-month loan, learn about alternative options at moneyadviceservice.org.uk.
If you have decided on a six-month loan, however, it’s vital that you compare rates from multiple lenders. While most payday lenders charge very similar rates for loan terms of one or two months, there is more variation and competition for six-month loan terms.
Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.
Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
You can use the tool below to get an idea of how much the loan that you have in mind would cost each month and overall, from a range of popular payday/short-term lenders.
Unlike payday loans, unsecured six-month personal loans are actually available from some of the big high street banks. It’s also possible to get a credit card with low or no interest on purchases for a set number of months. Although they may involve a longer application process, and stricter eligibility criteria, these options could be cheaper than a six-month loan from a payday/short-term lender.
Before applying for a payday/short-term loan you should always consider other options. Is the expenditure that you’re planning absolutely essential? If possible you should defer your purchases as this will save you money in the long run. If you need the money to pay for a bill, it’s always worth speaking to your provider to see if you can organise a payment plan or defer your payment. Read more about alternatives to payday loans at moneyadviceservice.org.uk.
Payday/short-term loans are a high-interest form of borrowing designed to help you overcome a temporary shortage in cash. Typically you will be expected to make monthly repayments, however it is possible with some lenders to pay back your loan weekly (or in a few cases, fortnightly). As a general rule of thumb, making repayments more often means that a loan will cost less overall. That may not be the case, however, if a lender charges different interest rates for loans repaid monthly/fortnightly/weekly.
Because six-month loans almost always have a fixed-rate of interest, you will know in advance exactly what you’ll have to pay, and when, and how much the loan is going to cost you overall. You should only take out a six-month loan if you’re certain you can meet this repayment schedule. Failure to do so could lead to your credit score being damaged, making it becoming harder to secure credit in the future.
Most six-month loans from payday/short-term lenders will be automatically repaid via Continuous Payment Authority (CPA). However, it is usually possible to pay manually or by direct debit instead.
What are the pros and cons of getting a six-month loan from a payday/short-term lender? Here’s a non-exhaustive list:
Requirements will vary by lender, but expect to be required to meet the following criteria:
CPA differs from direct debit because they give the company being paid the ability to withdraw money from your account whenever they wish, and to take payments of different amounts without consulting you. Most payday loan companies will use CPA to collect your repayments, however you can cancel this at any point by either consulting with your provider or your bank.
Credio was a popular source of short-term credit online until the lender stopped issuing loans in 2018.
Looking for loans like Cashasap? Check out our list of UK lenders offering similar payday loans and services to Cashasap.
Had a payday/short-term loan application declined? Wondering why? We take you through the top reasons payday lenders say “no” plus what to do next.
Looking for sites offering similar loans to Cashfloat’s? Browse popular short-term lenders offering a comparable service. Compare rates, fees, eligibility and estimate the total cost of borrowing.
Experiencing unexpected costs and considering a £1,000 short-term loan? Use our in-depth guide to compare rates between lenders and to get a fast and simple estimate of costs.
Sometimes unexpected costs pop up and leave us temporarily short of cash. If you need a helping hand for three months then you might be considering a short-term/payday loan. Use our guide to compare rates and total costs of borrowing from a range of UK lenders and to find out more about how short-term loans work.
It’s not always possible to see what costs are around the corner. If you’ve found yourself £300 short then you might be considering a payday/short-term loan. Use our guide to learn more about payday loans, to compare lenders and to calculate the cost of a £300 loan.
Need £100 to cover an unexpected shortfall? Before taking out a payday/short-term loan it’s smart to compare rates from a range of lenders. Use our fast and simple repayment calculation and learn more about short-term loans.
Why not repay your payday loan early if you can? Find lenders that let you close your loan early without charging you a penalty or fee.
