It's easy to get confused when applying for a loan. However, if you're prepared, you can simplify the application process.
This article discusses:
- should you get a loan
- applying for a loan
- what happens after applying
- how long it takes to go into your bank account
- how to get accepted for a loan
Should you get a personal loan?
Personal loans have different uses – for example, you can use one of our unsecured personal loans to buy a car or consolidate debt.
Once you've picked the correct type of loan for you, ask yourself these two questions:
- how much do I need to borrow?
- can I afford it?
Next, you must determine whether you'll get accepted for the loan. You won't get acceptance if you ask for significantly more money than you can pay back.
Responsible lenders base acceptance on factors like your:
- earnings
- credit score
- existing debt
You need to consider your financial commitments like rent or mortgage repayments, household bills and other essentials like food and transport, plus any financial obligations you already have.
For example, aiming to pay back £10,000 in 12 months while earning an annual salary of £20,000 would likely be too difficult.
How to get a loan
A loan provider will usually need the following:
- your identity (name, dob, address)
- employment details
- annual income
- monthly commitments
- other documents, like bank statements
They’ll then perform a hard credit check. You'll find out after applying whether you've been accepted, declined or referred for a further review.
Your lender will also ask you when you want your payments to start. After that, your lender will ask you to sign a credit agreement, which is the terms and conditions of your loan.
The agreement explains:
- your rights to take out money
- how to settle your loan early
- how to make a complaint
- what happens if you miss a payment
Read them carefully and ask yourself for a final time if this loan is right for you.
What happens afterwards?
Repayments automatically start the following month from your agreement date.
How long does it take to get paid into your account?
It usually takes three to five working days. Your lender will send you correspondence and a copy of the agreement. These will confirm the funds and when your first payment starts.
Improving your chances at loan acceptance
There are a few ways to increase your chances when applying for a loan:
Improve your credit score
Remember: you can't rush this – it takes time. However, if you can, it's worth waiting if it means you'll get a better deal suited to you. We recommend reading our article on how to improve your credit score.
Choose a loan that’s right for you
Picking the right loan can go a long way to ensuring you can pay it back. You want to avoid overborrowing, choosing one with high rates or using it on the wrong things.
Choosing the wrong loan can build up your debts, which leads to further problems.
