What is a short-term loan?

3rd November 2026

A short-term loan is a type of borrowing that is usually repaid over a relatively short period, often ranging from a few weeks to a few months.

Short-term borrowing can be expensive, and isn’t designed to deal with an ongoing gap between your income and essential spending. Before applying, consider the total amount repayable, the repayment dates and whether every repayment would remain affordable alongside rent, bills, food and other commitments.

In this guide, we’ll explain what short-term loans are, how they work, how long they last, how they may affect your credit rating and what to check before applying.

Moneyboat offers high-cost short-term credit repaid in fixed instalments over 2 to 6 months, subject to an application, creditworthiness assessment, and affordability checks. Approval is not guaranteed.

Quick answer: What is a short-term loan?

A simple short-term loan definition

A short-term loan is credit borrowed for a limited period, usually repaid over weeks or months, with repayment dates and borrowing costs agreed before the loan is accepted.

A short-term loan is a loan designed to be repaid over a shorter period than many standard personal loans.

The exact term can vary depending on the lender and type of credit. Some short-term loans are repaid within weeks, while others may be repaid over several months.

Short-term loans are usually used for temporary borrowing rather than long-term financial needs. Before applying, it’s important to check:

How much you want to borrow
How long you would repay it over
The total amount repayable
The repayment dates
The interest rate and APR
Whether there are any fees
What happens if you miss a repayment
Whether repayments fit comfortably within your budget

If you’re already struggling with ongoing bills, rent, debts, or other essential costs, further borrowing may not be suitable.

Free and independent advice is available from Citizens Advice, StepChange, MoneyHelper, and National Debtline.

What is considered a short-term loan?

There is no single length that applies to every short-term loan.

In general, a short-term loan is borrowed and repaid over a shorter period than a longer-term personal loan, which may run for several years.

Depending on the lender, a short-term loan may last for a few weeks, a few months or, in some cases, up to around a year.

With Moneyboat, short-term loans are repaid in fixed instalments over 2 to 6 months.

The most important thing is not just the loan's length, but whether the repayment schedule is clear and affordable. A shorter term may mean paying the loan back sooner, but it can also mean higher individual repayments. A longer term may spread the cost further, but it may also mean paying interest for longer.

Short-term loans may be used for one-off costs, but they are not designed to cover ongoing financial difficulties.

A responsible lender should show you the total amount repayable before you accept, including interest and any fees. You should also be told when repayments are due and what may happen if you miss one.

What is a short-term loan called?

Short-term loans can be described in different ways depending on how they are structured.

Some common terms include:

Short-term loans
Short-term instalment loans
High-cost short-term credit
Same day loans
Loans for bad credit
Payday loans

Some short-term loans, including Moneyboat loans, are regulated as high-cost short-term credit (HCSTC). Payday loans can also fall under HCSTC rules. The key difference is usually the repayment structure.

For example, a traditional payday loan is usually repaid in one lump sum on or around your next payday. A short-term instalment loan is usually repaid over several fixed repayments.

Moneyboat does not offer traditional payday loans. Moneyboat provides high-cost short-term credit (HCSTC) with fixed repayments over 2 to 6 months, subject to affordability checks.

How do short-term loans work?

A typical short-term loan application may include the following stages.

1. You apply for a loan

You choose how much you want to borrow and provide information about your income, outgoings and personal circumstances.

This usually includes details such as:

Your name and contact details
Your address history
Your income
Your employment or regular income source
Your regular outgoings
Your existing financial commitments
Your UK bank account details

2. The lender reviews your application

A regulated lender should carry out credit and affordability checks before offering credit.

These checks help the lender understand whether repayments appear affordable based on your income, outgoings, existing commitments and credit history.

A hard credit check may appear on your credit file and could affect your credit score. Approval isn’t guaranteed.

3. You see the repayment details

If approved, you should see the full loan details before deciding whether to accept.

This should include:

The amount borrowed
The repayment term
The repayment dates
The repayment amount
The interest charged
Any fees or charges
The total amount repayable

4. You repay in line with the agreement

Once accepted, repayments are collected on the agreed dates.

With a Moneyboat loan, repayments are fixed over 2 to 6 months, so you can see what is due and when before accepting the terms.

Short-term loans vs payday loans: What’s the difference?

Short-term loans and payday loans are often talked about together because both can fall under high-cost short-term credit (HCSTC). They can be similar in regulation and purpose, but the repayment structure may differ.

‘Short-term loan’ is a broad description covering several forms of borrowing. A traditional payday loan is usually repaid in a single payment on or around the borrower’s next payday. A short-term instalment loan is repaid through several scheduled payments.

Both can be forms of HCSTC. Repaying through instalments does not mean the loan is low-cost or suitable for everyone. It is important to compare the total amount repayable, the number and size of repayments, and the effect on each month’s budget.

Feature	Traditional payday loan	Short-term instalment loan
Credit type	High-cost short-term credit	High-cost short-term credit
Repayment style	Usually one lump sum	Usually several fixed repayments
Repayment timing	Around your next payday	Over an agreed short-term period
Budgeting impact	One larger repayment	Smaller scheduled repayments
Term length	Usually very short	Often weeks or months
Suitability	Temporary borrowing only	Temporary borrowing only

A payday loan is one type of short-term borrowing, but not every short-term loan is a payday loan.

Moneyboat does not offer traditional payday loans. Moneyboat provides high-cost short-term credit (HCSTC) with fixed repayments over 2 to 6 months, subject to affordability checks. This may be relevant to some people who are searching for payday-style borrowing, but the repayment structure is different.

For more information on payday loans, read our comprehensive guide.

What is a short-term instalment loan?

A short-term instalment loan is a loan repaid in several scheduled payments over a short period.

Instead of repaying the full amount in one lump sum, you repay in fixed instalments. These repayments are agreed before you accept the loan.

For example, with an instalment loan, you should know:

How many repayments there are
How much each repayment will be
When each repayment is due
How much you will repay in total

Fixed instalments can make repayment dates and amounts clearer, but they do not make the borrowing low cost. You should still check the total amount repayable and whether each repayment fits comfortably within your budget.

Read more about instalment loans and how fixed repayments work.

How long are short-term loans?

The length of a short-term loan varies by lender and product.

Some short-term loans may last a few weeks. Others may last several months.

With Moneyboat, short-term loans are repaid over 2 to 6 months. This means you can choose a repayment period that reflects your circumstances, subject to affordability checks and approval.

When comparing repayment periods, it’s worth considering both the repayment amount and the total amount repayable.

A shorter term may help you clear the balance sooner, but repayments may be higher. A longer term may reduce each instalment, but you may pay interest for longer.

You can learn more about specific repayment periods on our 3-month loans and 6-month loans pages.

How much can short-term loans cost?

The cost of a short-term loan depends on:

How much you borrow
How long you borrow for
The interest rate
The APR
Any fees or charges
Whether repayments are made on time

Short-term loans can be more expensive than some other forms of borrowing. Some short-term loans, including Moneyboat loans, are regulated as high-cost short-term credit (HCSTC).

HCSTC is subject to rules that limit how much lenders can charge, but it can still be expensive. This is why it’s important to check the total amount repayable in pounds and pence, not just the monthly or instalment amount.

What to check before accepting a short-term loan

Cost detail	Why it matters
Interest rate	Shows how interest is charged
APR	Helps compare the wider yearly cost of borrowing
Total amount repayable	Shows what you would repay in pounds and pence
Repayment dates	Helps you check whether payments fit your budget
Fees and charges	Shows whether there are extra costs
Late payment consequences	Helps you understand the risk if you miss a repayment

Moneyboat loans are regulated as high-cost short-term credit (HCSTC). In the UK, HCSTC rules how much lenders can charge. However, this type of borrowing can still be expensive and should be considered carefully.

What is a short-term cash loan?

Some people use the phrase ‘short-term cash loan’ when they’re looking for a small amount of money to cover a temporary cost.

In most cases, modern short-term loans are not paid in physical cash. If approved, funds are usually sent to your bank account.

It’s also worth being careful with the word ‘cash’. The important question is not how quickly money could arrive, but whether the loan is affordable, whether you understand the full cost, and whether there may be another option.

With Moneyboat, if approved, funds may be sent within 15 minutes*, depending on your bank’s processing times. This should not be the main reason for applying. Before accepting any loan, check the total amount repayable, repayment dates and whether the repayments are affordable.

* ‘15-minute funding’ means that funds can be deposited into customers’ bank accounts within 15 minutes once all checks have been completed. Please see our ‘Understanding the language we use’ page for more info.

Can I get a short-term loan?

You may be able to apply for a short-term loan if you meet the lender’s eligibility criteria and the loan appears affordable.

To apply with Moneyboat, you’ll need to:

Be 18 or over
Live in the UK
Have a regular source of income above £1,000
Have a UK bank account in your name

Meeting basic eligibility criteria does not guarantee approval.

Moneyboat reviews your income, outgoings and existing commitments as part of its affordability checks. We’ll only offer a loan if we believe it is affordable.

How can I get a short-term loan?

If you’re considering a short-term loan, take time to check whether borrowing is the right option first.

A typical application process may look like this:

Choose the amount you want to borrow
Check the repayment period and cost
Complete an online application
Provide income and personal details
Allow the lender to carry out affordability and credit checks
Review the offer, if approved
Accept only if the repayments fit comfortably within your budget

Before applying, it may be worth checking whether you could use savings, arrange a payment plan, ask for a salary advance, contact a credit union or seek free support.

Where can I get a short-term loan?

Short-term loans may be available from direct lenders, brokers, credit unions, or other regulated credit providers.

Before sharing personal details, check whether you are dealing with a lender or broker.

A direct lender provides the loan itself. A broker may introduce you to lenders or pass your details to other companies.

Moneyboat is a UK direct lender. You can learn more about the different loans available from Moneyboat, including short-term loans for specific one-off costs.

Do short-term loans affect your credit rating?

Yes, a short-term loan can affect your credit rating.

When you apply, the lender may carry out a hard credit check. This may appear on your credit file and could affect your credit score.

If you take out a loan and make repayments on time, this may be recorded on your credit file. However, taking out credit does not guarantee an improved credit score.

If you miss repayments or pay late, this can negatively affect your credit file and may make it harder to borrow in future.

Do short-term loans help credit?

A short-term loan shouldn’t be taken out just to try to improve your credit score.

While making repayments on time may be recorded on your credit file, there is no guarantee that taking out a short-term loan will improve your credit rating.

Borrowing should be based on whether you need the loan, understand the cost, and can afford the repayments.

If your goal is to build credit, it may be worth looking at other options and seeking independent guidance first.

Are short-term loans bad for your credit rating?

Short-term loans are not automatically bad for your credit rating, but they can affect it.

They may have a negative impact if:

You miss a repayment
You repay late
You apply for several loans in a short period
You borrow more than you can comfortably repay
You rely on short-term credit regularly

If you’re worried about your credit rating, take time to think carefully before applying. A credit application may leave a mark on your credit file, and missed repayments can make future borrowing more difficult.

You can read more about how lenders may assess applications on our bad credit loans page.

When might a short-term loan be considered?

A short-term loan may be considered for a one-off cost where the repayments are affordable and manageable.

Examples could include:

An urgent car repair
A broken boiler
Essential household repairs
A vet bill
An unexpected bill
A temporary shortfall affecting a one-off essential cost

If you’re borrowing for a specific essential cost, you may find these pages helpful:

Short-term loans aren’t suitable for ongoing financial difficulties. If your income does not regularly cover your essential costs, free support may be more appropriate than taking out further credit.

What are the alternatives to short-term loans?

Before applying for a short-term loan, it’s worth considering other options.

Depending on your circumstances, alternatives may include:

Using savings, if available
Asking your employer about a salary advance
Speaking to a provider about a payment plan
Checking whether you qualify for a local support scheme
Contacting a credit union
Asking family or friends for help, if appropriate
Speaking to a free debt advice organisation

If you are already struggling with debt, organisations such as Citizens Advice, StepChange, MoneyHelper, and National Debtline can help. You can also see a full list of free and independent support organisations here.

What is the best short-term loan?

There is no single ‘best’ short-term loan for everyone.

The right option depends on your circumstances, the cost of borrowing, repayment dates, affordability and whether borrowing is suitable at all.

Rather than looking for the ‘best’ lender, it’s more helpful to compare:

The total amount repayable
The repayment schedule
The interest rate and APR
Any fees or charges
Whether the lender carries out affordability checks
Whether the lender is clear about risks
What support is available if you struggle to repay

Avoid any lender that promises guaranteed approval, says there are no checks, or pressures you to borrow quickly.

Before you apply: Short-term loan checklist

This checklist is for general information only and is not financial advice.

Before applying, ask yourself:

Do I need to borrow, or is there another option?
Is this for a one-off cost rather than an ongoing shortfall?
Can I afford repayments alongside rent, bills, food, and travel?
Do I know the total amount repayable?
Do I understand the repayment dates?
Do I know what happens if I miss a repayment?
Could borrowing make next month harder?
Have I considered free support or lower-cost alternatives?

If you’re unsure whether borrowing is right for you, it may be worth seeking free, independent support before applying.

Short-term loan myths: What to know

Myth 1: Short-term loans and payday loans are always the same

Not always. Payday loans and some short-term loans can both be forms of high-cost short-term credit (HCSTC), but the repayment structure can differ.

A traditional payday loan is usually repaid in one amount on or around your next payday. Moneyboat’s short-term loans are repaid in fixed instalments over 2 to 6 months, subject to affordability checks.

Myth 2: Short-term loans are available with no checks

Regulated lenders should carry out credit and affordability checks before offering credit. Approval is not guaranteed.

Myth 3: A short-term loan will improve your credit score

There’s no guarantee that taking out a short-term loan will improve your credit score. Missed repayments can negatively affect your credit file.

Myth 4: APR shows exactly what you will repay

APR is useful for comparison, but it does not show the exact repayment amount in pounds and pence. Always check the total amount repayable.

FAQs about short-term loans

You apply for credit, the lender reviews your application, and if approved, you receive an offer showing the repayment amount, dates, interest and total amount repayable. You then repay the loan according to the agreed schedule.

Short-term loans can last from a few weeks to several months, depending on the lender. Moneyboat short-term loans are repaid over 2 to 6 months, subject to affordability checks.

You can apply if you meet the lender’s eligibility criteria, but approval is not guaranteed. The lender should assess your income, outgoings, credit history and affordability before making a decision.

Short-term loans may be available from direct lenders, brokers, credit unions or other regulated providers. Before applying, check whether you are dealing with a lender or broker and make sure you understand the full cost.

Yes. A credit check may appear on your credit file, and missed repayments can negatively affect your credit rating.

There is no guarantee that a short-term loan will improve your credit score. Borrowing should not be used solely to try to build credit.

Not automatically, but they can affect your credit rating if you miss repayments, pay late or make several applications in a short period.

There’s no single best short-term loan for everyone. The right option depends on the total cost, repayment dates, affordability and whether borrowing is suitable for your situation.

No. Moneyboat does not offer traditional payday loans that are repaid in one lump sum on your next payday.

Moneyboat provides high-cost short-term credit (HCSTC) with fixed repayments over 2 to 6 months, subject to affordability checks. Payday loans and Moneyboat loans are both regulated as HCSTC, but Moneyboat loans are repaid in instalments rather than one lump sum on your next payday.

Missing a repayment can affect your credit file and may lead to additional charges, within regulatory limits. If you think you may miss a repayment, contact your lender as soon as possible.

Warning: Late repayment can cause you serious money problems. For help, go to www.moneyhelper.org.uk. You can also see a full list of free and independent support organisations here.

Short-term loans: A summary

A short-term loan is a type of borrowing designed to be repaid over a short period, usually weeks or months.

Short-term loans can be useful for understanding temporary borrowing options, but they can be expensive and are not suitable for ongoing financial problems.

Before applying, check:

The total amount repayable
The repayment dates
The interest rate and APR
Any fees or charges
Whether a credit check will be carried out
What happens if you miss a repayment
Whether repayments fit comfortably within your budget

Important: Moneyboat does not offer traditional payday loans. Moneyboat provides high-cost short-term credit (HCSTC) with fixed repayments over 2 to 6 months, subject to affordability checks. Payday loans and Moneyboat loans are both regulated as HCSTC, but their repayment structures differ. Approval is not guaranteed.

If you’re unsure whether borrowing is right for you, advice is available from Citizens Advice, StepChange, MoneyHelper, and National Debtline. You can also see a full list of free and independent support organisations here.

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Representative Example: Borrow £400 for 4 months: 3 monthly repayments of £156.09 followed by a final repayment of £156.07. Total repayment £624.34. Interest rate p.a. (fixed) 288.35%. Representative 1,267.9% APR.

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Warning: Late repayment can cause you serious money problems. For help, go to www.moneyhelper.org.uk.