If you're facing unexpected costs and need extra cash, you might be considering a 2-month short term loan. Compare rates and find out costs and other options.
Facing unexpected expenses, like a major car repair, can be challenging to anticipate. Taking out a 2-month loan could be a solution for some, but it’s crucial to be aware of the high associated costs and explore alternative options first.
While some lenders offer 2-month loans with varying repayment structures, they often come with exorbitant interest rates, making them a costly choice compared to other credit options. For more financially sound alternatives, consider resources like moneyadviceservice.org.uk. If you decide on a 2-month short term loan, the application process is usually swift and straightforward, with many providers capable of transferring funds within minutes or hours upon approval.
Plenty of lenders offer loans you can repay in 2 monthly instalments. Normally the instalments are roughly equal, but some lenders in the first month only charge you the interest that has accrued, and then in the second month charge interest plus capital (the amount you borrowed). That can seem handy if you need a little time to get back on your feet – but it will cost you more in interest overall.
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.
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Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
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Is high-cost, short-term borrowing a good idea?
Payday or short term loans are very expensive and not a good idea for borrowing over longer periods, or for sustained borrowing. They may not solve your money problems.
Before applying for a payday or 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 a bill, it could be worth speaking to your provider to see if you can negotiate a payment plan or defer your payment. Read more about alternatives to taking out a payday loan at moneyadviceservice.org.uk.
What you need to know about 2-month payday loans
A 2-month short term loan is a high-interest form of borrowing, designed to be a temporary helping hand when you’re facing an unforeseen shortfall in cash. 2-month short term loans are generally paid in 2 monthly instalments, however some lenders will also provide the option for weekly or fortnightly instalments. Before taking out your loan you should make sure you’re confident you’ll be able to make the agreed repayments – failure to do so will damage your credit score, making it harder to secure credit in the future.
Key features
Small loan amounts. Although some lenders state that they offer short term loans of up to £1000 or more, don’t expect to be approved for this if you’re a new customer – lenders will want to start small.
High interest rates. The interest rates typically charged on 2-month loans are undoubtedly high. The maximum rate lenders can charge is 0.8% a day, but to put that into perspective, if you borrowed £200 for 2 months at a rate of 0.8% per day, and repaid in equal monthly instalments, the loan would cost you around £75 in interest.
Regular repayments. Normally you’ll pay back a 2-month loan in 2 equal instalments – the first being one month after taking out the loan, and the second, final payment, 2 months after taking out the loan. Many lenders offer borrowers the facility to repay fortnightly or even weekly. It is often advisable to align repayments with paydays – so if you get paid weekly, it could be a good idea to request loan repayments to be taken immediately after you’ve been paid each week.
Early repayment. Although when you sign up to a 2-month short term loan you will agree set repayment dates with your lender, it is usually possible to pay all or part of your loan back early. This is generally a great idea, if you can manage it. By paying off your loan early you could cut down how much you pay in interest. Make sure you check the early-repayment terms set by the lender before taking out your loan.
Paid back by CPA. Repayments on payday/short term loans are usually taken via Continuous Payment Authority (CPA), but you can usually opt to pay by direct debit or manually.
Fees. Although lenders generally don’t charge set-up/arrangement fees, expect to be charged up to £15 for a late repayment (this will also damage your credit rating, and your ability to secure affordable credit in the future).
Benefits and drawbacks
Spread repayments. Unlike a traditional “payday” loan, a short term instalment loan allows you to spread repayment over 2 months. That means 2 smaller repayments, rather than one larger repayment. However because you’re borrowing for longer than you might with a payday loan, you’ll pay more in interest overall.
Quick turnaround time. Over the years lenders have made great efforts in reducing the time it takes to get your loan. Many can give quick decisions on your application and if accepted can transfer your loan in just a few hours or even minutes. It’s important that you don’t let these quick turn around times make you rush your decision.
Easier approval. Whilst you must meet certain requirements to secure a 2-month short term loan, many lenders are more willing to provide finance to those with poor credit than banks might be. Many lenders now base their decisions primarily on affordability rather than credit history, meaning that you could secure a loan despite having a bad credit history.
High interest rates. If you take out a 2-month short term loan you should expect to significantly higher interest rates than you would with most other forms of credit. Although the cap for rates is 0.8%, most lenders will price their loans at or just below this rate. At such high rates it’s crucial that you pay back your loan as soon as you can. Short term loans are not a long-term solution.
Not a long-term solution. Short term loans are just that – for the short term. They are designed to cover an unexpected shortfall. Don’t expect them to cover or solve longer-term financial difficulties. For help and advice on dealing with longer-term financial difficulties a good place to start is the government’s MoneyHelper.
Disreputable lenders. Before taking out a 2-month short term loan make sure you have done your research on the lender. There are many unauthorised providers online that look to take advantage of those looking for quick cash. You should never borrow from a lender that is not approved by the financial conduct authority (FCA), so check this before you apply.
Eligibility requirements
Requirements will vary by lender, but expect to be required to meet the following criteria:
Be aged 18 or over.
Be a UK resident.
Hold a bank account.
Have an email address and mobile number.
Have some form of regular income.
What is a Continuous Payment Authority (CPA)?
A CPA is a recurring payment in which you give a company permission to withdraw money from your account on a regular basis.
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.
Frequently Asked Questions
Taking out a payday/short term loan will show on your credit report, but as long as you keep up with repayments your credit score shouldn’t be affected. In fact, showing you can repay loans on time is generally a good sign to future lenders. It is possible, however, that future potential lenders will see a payday/short term loan in your credit history as a sign of financial difficulty or disorganisation. It’s important to only ever take out a loan if you’re certain you can meet the repayment schedule. If you default on repayments then your credit score could be severely damaged, making it harder to secure credit in the future.
It is usually possible (and a smart idea) to pay back part or all of your loan early, and doing so could save you money in interest. It is a good idea to check the early repayment terms of a specific product before you apply for it.
Yes it is possible to cancel your loan within a set period of time at the beginning of your loan. You should check the terms and conditions set by the lender to see how long this is. When you cancel your 2-month short term loan you’ll be expected to pay the full amount back immediately.
As well as proof of ID, you are likely to need to provide information on some or all of the following: employment, income and expenditure, bank account, contact details.
If your application is declined you can normally try again at any time, but the outcome is unlikely to change unless your circumstances have. Remember that seeing multiple applications for credit in a short space of time on your credit report could put off prospective lenders in the future.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio
Chris's expertise
Chris has written 609 Finder guides across topics including:
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