Short term borrowing: What are the best options?

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Sometimes you just a little bit of extra cash to see you through to the end of the month. But what are the best options for short term borrowing?

We’ve all been there. Your washing machine packs up and floods the kitchen. Four birthdays arrive in the space of a few weeks. Your car breaks down at the worst possible moment.

Some months, no matter how carefully you plan, you’re going to end up spending more money than you’d like (or than you have). If you’ve got savings, then you can probably dip into those to make up the difference, but if you don’t, what are your options? Here, we break down the best (and worst) short term borrowing options for you.


Short term borrowing: Your options


Option #1: Friends and family

If you’re looking to borrow a little money and pay it back quickly, friends and family are often the best port of call. They’re often willing to help in many ways. Not only can they lend you money, but they’re often more understanding about terms of repayment. As an added bonus, there’s no credit checking or interest involved.

Some people avoid asking their friends and family because it puts them in an awkward situation. Always bear in mind that borrowing from friends and family may mean that they dip into their own emergency fund, so don’t be offended or upset if they say no.


Option #2: Overdraft

If you have an agreed overdraft on your current account, then you’re in luck.

Overdrafts – provided they’re a short-term solution – can be perfect for short-term borrowing. Just make sure you don’t exceed your agreed limit and budget next month to pay back the deficit.  If not, you could end up living out of your overdraft, which is a problem in and of itself.


Option #3: Peer to Peer (P2P) Lending

P2P lending is a lot like borrowing from a friend, except you don’t know the friend, you have to pay interest and there are strict repayment terms. So, not much like borrowing from a friend after all…

But the concept is the same. You head to a P2P lending site and find a stranger who is willing to lend you the money you need for the time you need it.

These people are often much more willing to lend people with poor credit money than a high street bank would be, but the same rule of thumb (‘better rates for better credit scores’) still pretty much applies.


Option #4: A payday loan

Across the UK, millions of people turn to payday loans to help them get from payday to payday.

And it’s easy to see why.

They can often feel like the quickest, easiest and simplest short term borrowing solution. You can borrow a relatively small amount of money until you’re back on your feet, then pay it back in one go. Even better, they’re likely to approve your application and you can have the money in your account almost instantly.

But that almost never happens.

Payday loans can seem like a short-term solution when you need money in a hurry but, they often only end up making your situation worse in the long run. Short term borrowing with an incredibly high APR makes it far more likely that you’ll be short of money again the next month, once you’ve repaid the amount you borrowed and its interest. Pretty soon, you’re caught in a cycle of dependency on payday loans. This can be very expensive.

But don’t just take it from us. Here’s what  Martin Lewis, creator of has to say about payday loans:


 A payday loan feels easy, but even now the amount of interest you pay has been capped, these loans are still an expensive nightmare. Take one out and you risk scarring your finances, and the possibility of paying back double what you borrowed. We don’t like payday loans. Most people who get them shouldn’t.


Option #5: Unsecured and guarantor loans

Unsecured and guarantor loans can be great options for short-term borrowing.

An unsecured emergency loan of up to £5,000 can often be approved, processed and in your bank account within the course of day. And, as long as you make sure there’s no Early Repayment Charge (ERC) you can clear the debt as soon as you have the money without it costing very much at all.


But what if you have a poor credit rating?

Having a guarantor when you apply for a loan can significantly increase your chances of being accepted, even if your credit rating isn’t very good. This is because, in the eyes of the lender, you become a much safer option with a guarantor, who will cover your repayments if you are not able to pay.

Plus, you can borrow up to £8,000 and the money will be in your account within 24 hours. Representative 49.7% APR. Not bad, eh? To see how much you could borrow, why not take our eligibility check? It’s quick, easy and won’t affect your credit rating. If you’re not sure what type of short term borrowing is right for you,  take our borrowing quiz to find out.



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