Short term loans explained

A short term loan involves borrowing money (usually a larger amount than a typical payday loan) and generally repaying in instalments over a short period of time.

As much as we try to save money for a rainy day, we can never be sure when an accident or emergency is going to occur that leaves us in need of funds. It is recommended to have a few months of your salary available as an emergency fund to pay for things such as a burst pipe, car repairs or dental bill, but this is not always as easy as it sounds.

It's very common to apply for a short term loan in order to get the money you need, and get your finances back on track.

Repaying in instalments gives you flexibility

Unlike a payday loan, with an instalment loan you get more flexibility in selecting a repayment term which can allow you to spread the cost. It's also likely that with this type of loan, you could (subject to assessment) borrow more than you could with a payday loan. Of course, borrowing more and over a longer period, you'll pay more interest – so the total you repay will be higher than if you repaid the loan over the shorter term.

The repayment terms for an instalment loan generally differ from lender to lender. Some only offer you the chance to pay back over a set period, while some may be more flexible. Short term loans from Mr Lender give you real flexibility and your loan term is dependent on how much you borrow. Our interest is charged on a daily basis, so you are not tied to the term of the loan and you can save money by repaying in full at any time.

Whilst payday loans can be a convenient way to pay off something quickly, it can increase the financial pressure if you have to repay the entire loan and interest in one lump sum on your next pay date. An instalment product allows you to stagger repayments and gives you that extra time and space that you need. With Mr Lender, instalment repayments reduce each month meaning they can be more affordable, and if you feel that you are ready to clear your account early, you can always do so and you won't be charged any extra fees.

How much does a short term loan cost with Mr Lender?

Most UK short term lenders calculate the repayments into equal monthly instalments, but at Mr Lender our interest charges decrease as the loan term progresses as we only charge interest on the capital outstanding at that time. This makes our loans more affordable for the customer.

Below is a repayment example for a £400 loan for 6 months (based on 30 day periods):
Month Amount owed Capital repayment Interest Total instalment
1 £400.00 £66.66 £96.00 £162.66
2 £333.34 £66.66 £79.80 £146.46
3 £266.68 £66.67 £63.90 £130.57
4 £200.01 £66.67 £48.00 £114.67
5 £133.34 £66.67 £31.80 £98.47
6 £66.67 £66.67 £15.90 £82.57
  £0.00 £400.00 £335.40 £735.40

Representative 1,266.2% APR

Representative Example: Borrow £400 for 6 months, repay with 6 payments — payment 1: £162.66, payment 2: £146.46, payment 3: £130.57, payment 4: £114.67, payment 5: £98.47, payment 6: £82.57 . Rate of interest 0.80% per day on outstanding capital. Total repayable £735.40 (based on 30 day periods). Interest rate 292% per annum (fixed). Representative 1,266.2% APR.

To see how much it would cost to borrow other amounts, please use our loan calculator.

Our standard daily interest rate is 0.80%, compliant with regulation provided by the Financial Conduct Authority. Our representative APR is 1,266.2% and this reflects the price that will be given to at least 51% of successful borrowers that apply. The APR is used as a standard benchmark for measuring financial products and can be used to easily compare alternatives such as personal loans and credit cards.

At Mr Lender, there are no fees for applying and we will never pass on your details to any third parties without your consent. In addition, there are no fees if you are unable to meet your repayment on time, or if you are late making a payment.

How to apply

To apply with Mr Lender, the application is completely online so you can apply by desktop, mobile or tablet 24 hours a day, provided that you have access to the internet. We try to make the process as simple as possible, so there is no hefty paperwork to fill in, no waiting at the bank and no need to wait days for an answer.

The basic criteria to apply is:

  • UK resident
  • At least 18 years of age
  • In employment earning at least £800 (net) per month
  • Valid debit card linked to the account you want us to transfer your loan into
  • No bankruptcy, IVA or CCJ in the last 3 years
  • Personal email address
  • Active mobile number

Our application form takes just a few minutes to fill in and you will be required to enter a few basic details about yourself including name, age, location, employment and account details so we know where to send the funds. Your information will be kept very safe as our website is on a secure server and we follow the strictest data protection laws.

Once your application has been completed, our system runs through some initial checks, once the checks are complete, if you have met our lending criteria, you will receive a message stating that you have been provisionally accepted.

You will need to read through our loan agreement and electronically sign this. Our underwriting team may then get in touch to confirm a few details, this could be to request proof of employment/income or confirm bank details.

If you have passed all the affordability and creditworthiness checks, we can transfer the funds to your bank account. The money usually reaches your account within one hour of approval.

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

Every application will be subject to credit checks and affordability assessment in line with responsible lending. High cost short term credit loans are not a suitable solution for people in financial difficulty and for longer term borrowing. * First time borrowing limited to £500. We may report late or missed payments to credit reference agencies, which may affect your credit rating and could make getting a loan more difficult and expensive in the future. Funds are usually transferred within an hour of approval.