How to Repay a Short-Term Loan on Time
Taking out a short-term loan is only half the job. Repaying it on time protects your credit record, avoids extra charges and leaves you free to move on. Most repayment problems are avoidable with a little planning. Here is how to make sure your repayment goes through smoothly.
Know exactly what you owe and when
Before the money is even in your account, you should know three things:
- The total amount you will repay
- The date the repayment is due
- How the repayment will be collected, for example by debit order
You will find these in your loan quote and agreement. If anything is unclear, ask the lender before you sign. Our guide on how to read a loan quote shows where to look.
Plan for the debit order
Most short-term loans are repaid by debit order on or around your payday. To make sure it goes through:
- Check that the debit order date matches the day your salary is paid in, or falls just after it
- Make sure the account the debit order is on is the one your salary goes into
- Be aware of other debit orders that run on the same day, so that there is enough money for all of them
If your payday changes, for example at month-end or over public holidays, tell your lender as early as possible.
Ring-fence the repayment money
As soon as your salary is paid, treat the loan repayment as already spent. Some people find it helpful to:
- Move other spending money to a separate account and leave the repayment where the debit order will find it
- Avoid card purchases on the morning of payday before the debit order runs
- Write the repayment amount in a budget at the start of the month
Our budget check before borrowing can help you plan the rest of the month around your repayment.
Set reminders
A simple reminder a few days before the repayment date gives you time to check your balance and fix any problem. Set one on your phone as soon as your loan is paid out.
Avoid borrowing to repay
Taking a new loan to repay an existing one usually makes things worse, because you pay fees and interest on both. If you think you will be short, the steps below are a better first move.
What to do if you might miss a payment
Contact your lender early
The most important step is to talk to your lender before the repayment date, not after. A lender can only help if it knows there is a problem. Explain what has changed and when you expect to be able to pay. You can contact us at any time if you have a loan with us.
Ask about your options
Depending on your situation and the lender's policies, options may include a new repayment date or a payment arrangement. Get any new arrangement confirmed in writing.
Understand the consequences
Missing a repayment can mean extra charges allowed under your agreement and can be reported to the credit bureaus, which may affect your ability to get credit in future. Our guide on improving your credit score explains how repayment history affects your record.
After you repay
Once your loan is settled:
- Check your bank statement to confirm the final payment went through
- Keep a record of the settlement
- Make sure no further debit orders run for the loan
- Consider setting aside a small amount each month to reduce the need to borrow next time; see how to build an emergency fund
If you are struggling with more than one debt
If repaying this loan is difficult because of other debts, look at the bigger picture. Our guide on what to do if you are struggling with debt repayments explains options such as payment arrangements and debt counselling.
Plan for months with extra costs
Some months are more expensive than others. December and January bring holiday spending and school costs, and annual insurance or licence renewals can fall in the same month as a repayment. When you take out a loan, look ahead at the month the repayment falls in and note any extra costs that are coming, so that they do not catch you by surprise.
A repayment checklist
- I know the total amount and the due date
- The debit order date matches my payday
- I have a reminder set a few days before
- I have kept the repayment money aside
- I know who to contact if something changes
The bottom line
Paying on time is mostly about preparation: know the date, protect the money and speak up early if something goes wrong. To see what a repayment would look like before you borrow, use our loan calculator.
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