Top Reasons UK Consumers Borrow Short-Term Loans (Based on Survey Data)

Short-term loans remain a popular way for UK consumers to manage sudden costs or temporary cash-flow gaps. While the cost of borrowing has risen in recent years, new survey insights show that many households still turn to short-term credit because traditional lending options are slower, harder to access, or not suitable for urgent one-off needs.

Below we break down the top reasons UK consumers borrow short-term loans, based on recent survey data and current market trends.

1. Unexpected Bills and Emergency Expenses

The most common reason UK adults borrow short-term loans is to cover an unexpected bill. According to multiple consumer surveys conducted in 2023–2024, more than 1 in 3 British households experienced at least one emergency expense over £300 in the previous 12 months.

Typical emergency costs include:

• Boiler or heating repairs

• Urgent car repairs

• Dental or medical expenses not covered by the NHS

• Appliance breakdowns (fridge, washing machine, oven)

• Vet bills

Many people do not have enough savings to absorb these sudden shocks. Short-term loans offer rapid access to funds, often within hours, making them a go-to option when timing is critical.

2. Managing Cash-Flow Gaps Before Payday

Cash-flow timing issues have grown since the cost-of-living crisis. Even middle-income households sometimes use short-term loans to bridge a few days or weeks between income and essential expenses.

Examples include:

• Covering rent due before payday

• Paying childcare costs upfront

• Managing irregular income from freelance or shift work

• Handling reduced income due to sick leave or seasonal work

For workers paid monthly, a single unexpected bill early in the month can create a large cash-flow imbalance. Short-term loans offer a temporary buffer — although borrowers must ensure repayment is affordable.

3. Car and Transport Costs

Transportation is another major trigger for short-term borrowing.

Survey data consistently shows that car-related emergencies account for at least 20% of all short-term loan applications.

These include:

• MOT failures

• Tyre replacements

• Emergency repairs

• Insurance excess payments

• Unexpected parking or traffic fines

Because many UK workers depend on their car for commuting — especially in rural areas — delays can affect their ability to earn income. A short-term loan lets people get back on the road quickly.

4. Consolidating Smaller Debts

A growing trend across comparison platforms is the use of short-term loans for mini-debt consolidation, particularly for:

• Overdraft fees

• Buy Now, Pay Later (BNPL) instalments

• Small credit card balances

• Store card debts

Borrowers sometimes prefer to roll several small payments into one fixed repayment schedule, even if the interest rate is higher, because it offers clarity, control and a definite end date.

5. Moving Home or Starting a New Tenancy

Short-term loans are often used to smooth the upfront costs of moving, which can be surprisingly high:

• Rental deposits

• First month’s rent

• Removal costs

• New furniture or appliances

• Utility connection fees

• Unexpected cleaning or handover costs

Surveys show that renters aged 25–34 are the group most likely to borrow for moving-related expenses due to the combination of high upfront costs and stretched savings.

6. Seasonal Pressures — Particularly Around Christmas

Another well-documented pattern is a spike in short-term borrowing in:

• November / December (Christmas & winter bills)

• August / September (back-to-school costs)

Consumers cite pressure to manage:

• Gifts

• Higher winter energy use

• School uniforms and supplies

• Travel costs

Although advisers stress borrowing should be avoided for seasonal spending where possible, this remains a significant driver of demand.

7. Household Bills and Everyday Living Costs

Since 2022, rising inflation has pushed more households toward short-term credit simply to manage day-to-day expenses. These aren’t emergencies — just sustained pressure.

Typical examples include:

• Higher grocery costs

• Increased energy bills

• Council tax

• Broadband/mobile

• Childcare fees

While short-term loans are not designed for ongoing expenses, many households use them as a last resort when budgeting gaps appear.

8. Supporting Family or Helping with Shared Expenses

A smaller but growing group of borrowers use short-term loans to support others, such as:

• Helping a partner or family member cover an urgent bill

• Paying childcare for a shared-custody arrangement

• Covering expenses during a friend or family crisis

This reflects rising “financial responsibilities beyond the individual”, according to analysis from several UK finance studies.

What These Trends Tell Us

Across all data sources, the message is clear:

▶ Most short-term loan borrowing is event-driven, not habitual

▶ Consumers rely on speed and certainty of approval

▶ Savings buffers remain very thin for many UK households

▶ Car, home, and basic household emergencies are the biggest triggers

Short-term loans can be useful when used responsibly, especially for genuine one-off emergencies. However, they’re not suitable for long-term borrowing and should always be compared, planned, and repaid as quickly as possible.

Final Thoughts: Always Compare Before Borrowing

Because interest rates and fees vary widely across the UK short-term lending market, taking a few minutes to compare lenders can save significant money.

Borrowers should look at:

• Total cost of repayment

• APR

• Early repayment options

• Late fees

• Credibility and FCA authorisation of the lender

• Customer service support

Comparison tools like UKLoanCompare.co.uk help consumers quickly review multiple FCA-authorised lenders to find transparent, affordable and suitable short-term borrowing options.