We all know that being a student is more expensive than ever before. It costs up to £9,250 a year in tuition fees in England, £9,000 in Wales, and £4,030 in Northern Ireland, according to the Times HES. A Save The Student survey found that the average student’s living costs were £267 a month higher than the money they received via their maintenance loan. According to the National Union of Students, 2% of students use payday loans in an attempt to overcome temporary financial roadblocks.
80% of students worry about money according to the Guardian, so what do you need to know about short-term loans for students?
Your frequently asked questions
- How much can a student borrow?
- Can I get a quick student loan from my bank?
- How quickly can I get a short term student loan?
- How long can I spread the repayments over?
- What types of credit are available to UK students?
- Will a short-term student loan affect my credit rating in the long term?
How much can a student borrow with a short-term loan?
For each lender in the student short-term loan market, they will generally have their own minimum and maximum levels of loans that they are happy to arrange. Likewise, some lenders may only be willing to extend a loan over the period of a few months whereas others would consider offering loans of up to 5 or more years in length.
Can I get a quick student loan from my bank?
Student-focused short-term loans charge a much higher rate of interest than a loan you receive from your bank. Many students may ask their bank for an extension of their overdraft – the interest rate charged on an overdraft extension is likely to be much lower than you’d be offered on a student short term loan.
However, you may end up paying more in interest to the bank on an extended overdraft if you live in that overdraft for a prolonged period of time. Before making a decision to apply for a student short-term loan, please work out how long you think you’re likely to need your bank overdraft and calculate the total cost of that extension in both interest fees and facility fees (that is what the bank will charge you to extend your overdraft).
You will then be in a good position to make a decision on whether an overdraft extension or a student short term loan is better for you. The more information you have, the smarter choice you can make for you and your financial circumstances.
If you apply for a student loan from your bank or apply for a student overdraft, your bank will run a hard credit search on you. The more hard credit searches that are run on you in a short space of time, the more likely that your credit score will be reduced and the harder you’ll find it as a result to access credit. You’ll also need to complete an affordability assessment as part of your application to prove to the bank that you are able to repay on time and in full the loan or overdraft.
How quickly can I get a short term student loan?
The length of time it takes to receive a short term student loan depends on the lender or broker that you’re applying to. While some can send your loan to your bank account within a few minutes, others may take longer.
How long can I spread the repayments over?
As most student short-term loans are for less than £1,000, lenders may offer you a repayment period of 3 months, 6 months, or 12 months. If you choose a longer period of time over which to pay your loan back, you benefit from lower monthly repayments although the total amount of interest you’ll pay on your loan will be higher.
What types of credit are available to UK students?
As we mentioned earlier, your bank may be able to assist you. You may also wish to consider credit cards to pay off any unexpected bill or expense that has occurred. It may take a few days for a credit card company to send out a card to you – and this might cause an issue though if you need the money straight away.
You may wish to enquire to your university or college whether they run a hardship fund. Hardship funds provide students with grants (which don’t need to be repaid) or loans (often with minimal or zero interest). The government’s website provides information on how to find out about student grants and loans.
Will a short-term student loan affect my credit rating in the long term?
Taking out a short-term student loan will affect your credit score and the effect it will have depends on how well you run your account. Repaying your loan on time and in full may actually improve your credit score however this is not guaranteed.
Short term loans for students from Growing Power
Growing Power is a broker – we’re not a lender. We have a panel of over 40 established and reputable FCA-authorised and regulated lenders, a few of whom may consider student loans applicants. It’s the companies on our panel who lend money to students, not Growing Power. Our job is to use the details you give us when you’re applying for a student short-term loan so that we can then match you to the right lender.
Please note that the lender on our panel will not be able to offer loans to students without regular income from employment.
How do we match you up? When we start working with each of the lenders on our panel, they tell us whether they’re happy to make short-term loans to students. If they are, we then ask them about the financial profiles of the students they like to offer loans to.
With the information you give us, we then contact the lenders where there is a higher likelihood of having your short-term loan application approved based on the information you provided to us.
Each of those lenders will run a soft credit search on you – only you can see soft credit searches on your credit report and they don’t affect your credit score.
Our application form (which includes an affordability assessment section) takes 2-3 minutes to fill in. When you’ve completed it, we will redirect you to the website of the lender who, based upon their responses to us, is most likely to offer you a competitive and affordable student short-term loan. If you decide to complete that lender’s application, they will run one hard credit search on you as part of their decision-making process. Please be aware though that, on occasions, we will be unable to find a lender who wishes to proceed with an application.
Once your application is approved, your loan could be sent to your bank account within minutes* of signing the lender’s online agreement form (after you’ve read and agreed to the terms and conditions).
Our service is free of charge. There is no obligation on you to accept any offer made to you by one of our lenders.
If you are a student in debt and you’re worried about the level of debt you’re coping with, you may benefit from speaking in confidence to one of the UK’s leading six debt charities and organisations. To find out more about what each organisation does, please click on the following links – StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.
To apply for a student short-term loan through Growing Power, please click here.