How to apply for a loan
Written by
Joe Towner
Reviewed by
Amy LancashireApplying for a personal loan typically involves checking your credit, working out how much you can afford, comparing lenders and then checking your eligibility with a soft search that won't affect your credit score. Most applications are done online, and you can often get a decision the same day.
There are some differences depending on the loan, for example, a secured loan is different from an unsecured loan and requires you to put up some collateral against the loan, such as your property. The steps below apply to an unsecured personal loan, but to learn more about that you can read our guide to secured loans.
Here's each step in detail, what you'll need to hand, and how to make sure you’re being offered the best terms available.
What you need to apply for a loan
Most UK lenders ask that you:
are 18 or over
are a UK resident
have a regular income
have a UK bank account
Being eligible isn't the same as being accepted. Lenders still check that the loan is affordable for you, so meeting the basic criteria is the starting point, not a guarantee.
It helps to have the following ready before you start, as you'll usually be asked for them:
Proof of identity – a passport or driving licence
Proof of address – a recent utility bill, bank statement or council tax bill
Proof of income – recent payslips, or bank statements and tax returns if you're self-employed
Your bank details – for the account the loan will be paid into and repaid from
Financial details – your regular income and outgoings, plus employment and address history
How to apply for a loan, step by step
Check your credit score and report – lenders use these to decide whether to lend and at what rate. Check your report for mistakes and fix any before you apply. Being on the electoral roll will help, so it might be worth registering to vote if you haven't. For more, see our guide on how to improve your credit score.
Work out how much you need and can afford – borrow only what you need, and check the monthly repayments fit your budget comfortably. Use a loan calculator to see what different amounts and terms would cost.
Compare lenders and check the APR – the APR is the yearly cost of the loan including interest and fees, and it's the fairest way to compare offers. The rate you're offered depends on your credit profile and the amount and term you choose, so the lowest advertised rates usually go to people with the strongest credit. If you're unsure how it works, read the difference between APR and interest rate.
Check your eligibility with a soft search – many lenders let you check how likely you are to be accepted, and often your likely rate, using a soft credit check. This doesn't affect your credit score, so it's worth doing before completing the full application.
Gather your documents – have the proof of identity, address and income listed above ready, so you can complete the application in one go.
Submit your application – apply online, in an app, by phone or in a branch. When you formally apply, the lender runs a hard credit check, which is recorded on your credit file. Avoid making several applications in a short space of time, as multiple hard searches can lower your score.
Review the agreement and get your funds – if you're accepted, read the loan agreement carefully, including the APR, the term and the total amount you'll repay. Once you sign, the money is often paid into your account the same day or within a few working days.
How can I apply for a loan with bad credit?
The process is the same, but a lower credit score can mean fewer offers and higher rates. Using a soft search first matters here, so you can check your chances without adding hard searches to your file.
Some lenders consider applications from people with a poor or limited credit history, and being on benefits doesn't automatically rule you out. Approval still depends on whether the loan is affordable for you. You can read more about loans for people with bad credit and, if relevant, getting a loan while on benefits.
How long does it take to get a loan?
It doesn’t necessarily take that long. An eligibility check could be a few minutes, and once you formally apply, many lenders give a decision within minutes to a day. If you're accepted, the funds are commonly paid out the same day or within a few working days, depending on the lender and your bank.
Can I apply for a loan together with someone else?
Yes, in two different ways:
A joint loan: two people apply together and are both equally responsible for repaying it. Both of you are credit checked, and both are liable for the full amount, not just half.
A guarantor loan: someone else agrees to cover the repayments if you can't. This can help if your own credit history is limited, though the lender still checks that the loan is affordable for you. See our guide on what a guarantor loan is.
Applying for other types of loan
This guide covers personal loans. Some other borrowing works differently:
Student loans: apply through Student Finance, not a bank.
Budgeting and crisis help: if you're on certain benefits, you may be able to get a Budgeting Loan or Budgeting Advance from the government instead of a commercial loan.
Business loans: these use a separate application process and different products, including the government-backed Start Up Loans scheme for new businesses. A personal loan is generally not supposed to be used for business borrowing.
FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
