How to get a loan
Whether you’re looking to fund home improvements, a new car or an unexpected bill, taking out an unsecured loan can be one way to pay for something you can’t afford upfront. Here, we explain how to apply for a loan.
Whether you’re looking to fund home improvements, a new car or an unexpected bill, taking out an unsecured loan can be one way to pay for something you can’t afford upfront. Here, we explain how to apply for a loan.
60-second summaryApplying for an unsecured loan is generally straightforward, assuming you meet the acceptance criteria and there are no unforeseen problems. Here’s how it works:
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How to apply for a loan
Applying for an unsecured loan is usually pretty straightforward. These are the steps you’ll need to take:
- Think about whether a loan is definitely the right option for you: it can be more flexible than other forms of credit as you can often spend the money however you like. But interest rates can be high and it’s a relatively long-term financial commitment.
- Decide how much you need to borrow: our loan calculator can help you work out how much you can afford and what your monthly payments might be.
- Check your credit score: you can check your credit report for free with the three main credit reference agencies – Experian, Equifax and TransUnion. The higher your credit score, the more chance you have of being approved and getting the best loan rates.
- Check your eligibility: use our loan eligibility checker to see which loans you’re most likely to be accepted for, without impacting your credit score.
- Get your documents together: you might need proof of income, bank statements and ID to apply.
- Apply online or in a branch: fill out the application form accurately. Review it before you submit.
What do I need to get a loan?
To be eligible for a loan, you’ll need to meet the lender’s requirements. These vary between providers but typically you’ll need to:
- Be at least 18 and meet any other age requirements. Some lenders ask that you’re 21 or older; some have upper age limits too
- Have a regular income
- Be on the electoral register
- Have a bank account
- Be able to afford the repayments.
Will my loan application be accepted?
Whether your application is accepted depends on several things, including:
- Your credit score
- Your income and existing debts
- How much you want to borrow.
How long does it take to get a loan?
This depends on the lender and the type of loan, but most providers will let you know if your loan application has been successful within five working days. Sometimes a lender will approve your loan on the same day.
How long does it take to get my loan money?
If your loan application is approved, the time it takes to get the funds depends on the lender. It could be the same day, but it could take between two and five working days.
How much can I borrow?
The amount you can borrow depends on your income, credit history and the type of loan. Lenders will also take into consideration any existing bank loans, debts and other outgoings.
- Personal loans (unsecured): you can typically borrow £1,000 to £25,000.
- Secured loans: if you use an asset such as your home as security, you could potentially borrow up to £100,000 from most lenders. Some will lend as much as £500,000, depending on the value of the asset.
The golden rule when applying for a loan is to only borrow what you can comfortably afford to repay.
To find out more about types of loans and alternative options, head to our personal loans guide.
How to get a loan with bad credit
If you have a low credit score, don’t panic. You may still be able to get a loan, though it might be for a lower amount and have a higher rate of interest than what would be offered to people with a high score.
Here are some steps to take to improve your chances:
- Improve your credit score: check your credit report for any mistakes, get on the electoral roll and – if applicable – make all your credit repayments on time every month
- Only apply to borrow what you need: lenders will be reluctant to lend large sums to borrowers they consider high risk. But even if you’ve got an excellent credit score, it makes sense not to borrow more than you need as you’ll be charged interest on the entire sum.
Find out more: bad credit loans
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
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Experts in personal finance, insurance and utilities
Compare the Market’s Editorial Team is made up of industry experts with decades of experience in personal finance, insurance and utilities. Each of our authors has an area of expertise, where they can share their extensive experience to help you get a better deal, by finding the right product and saving money.