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How To Apply For A Loan - A Complete Guide
Taking out a loan can give you a helping hand – but you need to be sure it’s right for you. Here’s our step-by-step guide to applying for a loan.
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It’s a good idea to understand your options beforeor filling out any applications. Ask yourself these questions:
- Do you really need it, and can you afford to pay it back?
Paying back a loan, in full and on time, is the best way to make sure you don’t fall into arrears.
- Are you likely to get the advertised rates?
Lenders only have to give the advertised rates to 51% of their customers who are accepted for that loan. This means nearly half of their customers could receive different – and sometimes higher – rates.
- What’s your credit score?
A bettercould mean better offers. Checking your score regularly will help you figure out when you’re most likely to get the best loan offer.
We think finance should work for everyone, that’s why checking your credit score and report is free, forever at ClearScore. We’ll also give you easy tips to help improve your score – because a better score could mean better offers.
And, if you see offers with our, what you see is what you get. We lock in your loan amounts and interest rates, and we’ll also show you if you’re pre-approved. So you can be more sure of getting a ‘yes’ when you apply.*
You’ll need to give the lender some details about yourself so they can check if you’re eligible. They’ll probably ask for:
- Your bank details (of the account you want the loan to be paid into)
- Your current address and any from the last three years
- Proof of employment and income (so they can see if you’re able to make repayments)
The application process is simple – you can search for and compare as many loans as you like on ClearScore. We’ll show you offers tailored to your score so you can make the best choice for you. Then, all you need to do is:
Decide what you want the loan for
There are lots of different loans out there and you might have to tell the lender what it’s for.
Establish how much you need to borrow
How much money you borrow will shape your monthly repayments. Always make sure you can afford to pay back what you borrow plus the interest.
Work out how long you’ll need to pay it back
Paying back money over a short loan term could mean you need to budget for a higher monthly expense. But a longer loan term could mean you pay back more in total because of theover several months.
Provide all the details the lender asks for
They’ll ask for things like proof of ID, address and income.
Choose the right provider for you
We work with over 40 lenders to give you offers tailored to your score. Choosing a personalised offer has never been easier.
Wait for the money to arrive in your account
You should get the money quite quickly but make sure you check with your lender.
People take out loans for lots of reasons, like getting a new car, making home improvements, or consolidating debt. If you’re sure you need it and you’re confident you can make repayments, a loan can help you on your way.
The amount of money you can borrow depends on the lender and your credit history. For example, a person with a low or bad credit score might not be offered a large sum because the lender can’t be sure they’ll be able to pay it back.
If you do have a bad credit score, there are some things you can do to improve it or you could look at different types of loans. For example, a guarantor loan (where someone else agrees to make repayments if you can’t) or a secured loan (where something like your car or home acts as security) could work.
Keeping an eye on your credit score and understandingis a great way to start unlocking better offers.
If you have a bad or low credit score, you.
You might have to pay more interest, or you might have to get a secured loan where you offer something as security (like your house, car or savings account).
But, if you do get a loan and you make your payments on time and in full, you can grow your credit score and unlock better offers. Some of our lenders will offerwhich could increase your chances of being approved.
Here’s a representative example from one of our lenders:
If you borrow £2,000 over 24 months at a fixed rate of 59.9%*:
Monthly repayments = £131.05
Total amount repayable = £3,145.20
*59.9% representative APR
If you’re wondering how to, we’ve pulled together some easy steps you can take.
While you can’t take out a regular loan, you can make a request for a ‘budgeting advance’ if you’re on universal credit. The advance must be used for certain costs (like work-related expenses, repairing a broken fridge for example) and you’d receive reduced universal credit until you’ve paid off the amount you borrowed.
After choosing the type of loan you want and the lender you’d like to go with, you’ll fill out your application. When you’ve done that, the lender will do ato make a final decision.
It can depend on the lender, but you should get the money in a few days.
Check your details are correct
Taking the time to double-check your information means avoiding problems caused by misspelt names or addresses.
Know your credit score
Your credit score helps explain to lenders (the banks, building societies etc) if you’re someone they can rely on to pay back the money you want to borrow. They use your score, combined with your report, to get a better idea of how you manage money before giving you a loan,or .
Keeping an eye on your score and report for any missed payments or mistakes can give you a better idea of you chances of being approved for a loan.
Because everything’s done online, the application process is usually designed to be quick and easy. Generally, they’ll be able to tell you if you’re approved, how much you can borrow, and what your repayments will be within a few days. And the application itself should only take about 15 minutes.
Remove credit freezes
Lenders need to check your credit history as part of the application and approval process when you take out a loan. Having a credit freeze or credit lock (both of which limit access to your report) will slow down things down. You can always activate it again after you have your money.
Look for pre-approved loans
If you need money quickly, it might be worth looking at. Pre-approval is subject to the information you submitted being correct and the lenders’ checks, but it can give you a good idea of how likely you are to get that loan.
At ClearScore, we show you your approval chance (out of 100%) so you can feel more confident when it comes to applying.
Next step Startwith ClearScore today!
*Pre-approval doesn’t always guarantee acceptance, and is subject to lenders’ checks of your credit status
Helen's our resident Digital Copywriter. She makes personal finance easier to understand so you can be ClearScore sure about your choices.