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What are short term loans suitable for?

Written byKoyo Loans
First published22nd July 2022
  • What is a short term loan?
  • What can you use short term loans for?
  • Alternatives to short term loans
  • The verdict

If you find yourself in a financial tight spot towards the end of the month, you might have considered applying for a short term loan. These are typically high-interest loans that come with short repayment times – usually within a few weeks or months. But what are short term loans suitable for, and are they a viable way to borrow money?

What is a short term loan?

Unlike a conventional personal loan that is usually paid back over a period of several years, short term loans are typically paid back within weeks or months. You can apply for short term loans from banks, credit unions, and online lenders, depending on your eligibility and your credit rating. They are often characterised by high-interest rates and are an option for people who need access to cash quickly. 

Payday loans are a form of short term loans, but they’re an extremely expensive option and can come with exorbitant fees and interest rates. Research shows that the average APR of payday loans is around 1,250%, highlighting just how expensive this form of borrowing can be. We encourage you to explore other options available to you before settling on a payday loan, as you can easily get yourself into a difficult financial spot with this form of credit. 

What can you use short term loans for?

The best way to think of a short term loan is as a type of emergency credit. They’re suitable when you need urgent access to cash that you don’t currently have and could be used to pay emergency repair bills or medical expenses, for instance.

Due to the high fees and interest rates associated with shorter terms of borrowing, you shouldn’t apply for a short term loan to pay for non-essential items. You also need to make sure you can pay the loan plus interest back in the stipulated period of time. 

Alternatives to short term loans

One of the reasons why people often apply for short term loans is that they typically provide access to quick cash and are often approved the same or the next day. But given the high-interest rates and tight repayment terms, they’re not the best form of credit available to you. Alternatively, you might consider: 

Personal loans

Unsecured personal loans are an excellent alternative to short term loans and come with much more manageable interest rates and fees. They can also be paid back over a longer period of time, with most personal loans spanning several years.

When you apply for a personal loan with Koyo, we make a decision with speed, and you normally have the money within 48 hours. 24.9% APR Representative.

Credit cards 

If you have a good credit history, you might be able to access a 0% credit card to use instead of a short term loan. You can buy or pay for what you need and then settle the balance of your credit card before the 0% interest period expires. Most credit cards come with one month interest-free, but you could find deals for several months or even a year. 


Sometimes, payday can’t come quickly enough. Lots of banks offer current accounts with 0% overdrafts, meaning you can go into your overdraft without incurring additional fees. Most overdrafts are available for a few hundred pounds and aren’t suitable for borrowing large amounts. Still, they’re a good option if you can agree to an arranged overdraft with your bank. 

The verdict

While short term loans are seen as a necessity by some people, the reality is that there are much better alternatives out there that provide you with access to quick cash. If you apply for a personal loan from Koyo Loans, we will consider your application quickly and deposit the money into your account within 48 hours if approved. Use our loan calculator today to determine how much you could borrow. 24.9% APR Representative.

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0JL

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