If you have money problems it can be enticing to take out a short-term loan to finance a new car or a holiday. But beware – short-term personal loans are expensive, because the banks can ask for annual interest of up to 15%.

There are situations in which a short-term loan is a perfectly reasonable solution to tide you over, but we strongly advise against using loans on a regular basis, as you will be adding the repayments to your household budget over an extended period, which is particularly critical if you become unemployed.

The choice of short-term loans varies greatly. It is worth comparing them in great detail and calculating the costs before committing to one. Look for alternatives too. A loan from relatives or friends can be a lot cheaper. Or choose to save and only make a purchase when you can afford it. This is the cheapest option and you have the added pleasure of anticipation.