Things You Shouldn’t Buy With A Short Term Loan

Short term loans used to commonly have another name, when dealing with loans of 1 month or under. I refer to payday loans. Payday loans have attracted much criticism in recent years in the media. However, they served an important purpose in the financial market, and are crucial to many when struggling for funds. With recent legislation resulting in more stringent regulations for the short-term loan market, there has never been a better or safer time to make use of a short-term loan. But loans should not be used for any situation. Listed below are things you shouldn’t buy with a short-term loan.

At Moolr, we are passionate about finding finance for those that need it. That includes those with a mixed credit history, and we offer a range of products, whether it be a £1000 12 month loan, £1000 loans over 24 months or 15 month loans. However, we do not push loans onto potential borrowers.

No, we insist that you do your full research first, and only proceed if a short-term loan is right for your individual needs. With that in mind, we’ve listed a few situations that we feel might not necessarily be the best use for a short-term loan.

Things You Shouldn’t Buy With A Short term Loan


Payday loans are a good source of instant funds should a one-off emergency arise that leaves you short of money before your next wage arrives. A cash advance can help you through a tricky period, but it is designed to deal with the unexpected.

It’s fair to say that holidays do not come under the remit of an “emergency”. Nor are they unexpected. Last-minute deals are a common tool for those that holiday nowadays, but this is not a just cause for taking out a short-term loan. This will simply mean returning to debt.


We love to receive gifts and many of us love to give them too. However, the list of events during any given year that requires a present has never been bigger. Birthdays, Christmas, weddings, anniversaries, Valentine’s Day, Mother’s Day. The list goes on, and if you are struggling with money, it can be crippling financially to have to give out gifts for all events. Taking out a loan is certainly not a good idea for covering such events. A better idea is not to give out a gift. Those around you will understand, and a good idea could be to make something as a present instead. The monetary value should not be important to any friend or family member. After all, it’s the thought that counts.

Things you shouldn’t buy with a short-term loan – Gambling Funds

Many of us like a flutter every now and then. Be it on a horse or a football accumulator, there is little wrong with the occasional bet as long as you enjoy it and bet responsibly. However, borrowing money to bet is a very bad idea indeed.

Anyone who gambles thinks they are good at it, that they can “beat the system”. Most don’t however – as the saying goes, you never see a poor bookmaker. Taking out a short-term loan to risk it on a certain outcome is very foolish, and the short repayment period means you have little time in which to succeed.

Business Investments

Many people make business investments, and taking out a loan to do so is perfectly normal practice. However, a short-term loan is completely the wrong type of loan with which to do this.

Paying Back Debts

I think especially of debts owed to those around you – friends and family. Logically it makes little sense, taking out extra debt. Nor taking on extra interest debts on top, to pay back people you know. Better to use the money you would have used to make the loan repayment to pay your friends and family. Do this when you are in a position to afford that.

Luxury Items

We all like the occasional treat, and there’s nothing wrong with that. Using a payday loan for such an occasion such as a new watch or car or television is not advisable. Luxury treats are not emergency loans, and short term loans are designed for one-off emergencies.

Paying back a Previous Payday Loan

Some lenders will allow extensions or “rollovers” to loans. However, such options only bring with them extra fees and interest charges. If you taking out loans to pay for loans, you put yourself in a dangerous position. If you are struggling to pay off a cash advance or short term loan, the best thing you can do is contact your lender. Try and resolve the situation.

Paying Off Overdrafts

Many of us deeply resent paying for an overdraft, both for the monthly fee and the interest charges it attracts. I was the same, and the relief when I recently cleared my overdraft for good was immense. However, the figures don’t always make sense when prioritising debt. Many see getting rid of the fees associated with overdrafts as the priority. A priority over higher interest charges elsewhere. For this reason, it is something of a false economy taking out other short-term debt. Especially if at higher interest, in order to clear your overdraft. You should always take the option that makes sense financially, even if that means paying off your overdraft more slowly.