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How to Get a Personal Loan: The Ultimate Guide
Are financial worries keeping you up all night? Or would you like to add a garden office to your home or make renovations? There are many reasons to get a personal loan.
Personal loans can be a great way to pay down debt and more. However, before applying for a personal loan it is best to learn how they work.
That is why we have created this helpful guide. You will find information on what a personal loan is, how it works, and more.
What is a Personal Loan?
A personal loan is an amount of money that is borrowed from credit unions, banks, and supermarkets, or even online lenders. The amount varies but generally runs between £100 to £25,000. When the loan is granted, it must be paid back with interest. Loans are usually set to be paid back monthly. The term of the loan (when the money must be paid back) is usually between 3 months and 5 years.
The most common reasons for obtaining a loan include:
- Debt consolidation
- Home renovation or extension
- Moving costs
- Purchase of appliances
- Vehicle financing
- Emergency expenses
- Vacation costs
- Wedding expenses
- Funeral expenses
The most common types of personal loans include:
- Guarantor loans
- Secured loans / homeowner loans
- Unsecured Personal loans
Why Get a Personal Loan?
There are many reasons to consider getting a loan. You are not alone; many people at some point will find it necessary to borrow money through a loan. This may be due to unexpected home repairs or medical expenses, and more. When you simply do not have enough money to cover unexpected expenses or you are faced with a large expense (such as a home renovation), then a loan may be the best option.
However, we must say that it is always a good idea to first consider your financial situation before taking out a personal loan. Only borrow money if there is no other way to manage the situation. If you decide to move ahead with the loan, then it is a good idea to shop around for the cheapest personal loans from trusted lenders.
By using our personal loan comparison site, you can rest assured that our financial partners are trustworthy and offer some of the best rates on loans available. You will find our site easy to use and we provide you with a wide range of products to choose from. Not only that, but our personal loan calculator provides information on what you may need to pay before you even start the application process. This way, you can run a comparison and find the cheapest personal loans. These will be from lenders who have accepted your application.
A quick, easy way to get a personal loan today.
Borrow from £300 to £10000.
Choose between lenders who have accepted your application.
Absolutely no fees, ever.
Reasons Not to Consider a Personal Loan
There are some financial situations where it is very unwise to take out a personal loan:
- To use for gambling, gambling debts, or to support other addictions
- To pay off monthly bills, a mortgage or rent
- To buy non-essentials such going out, buy clothing, and more
Using a personal loan in these ways could lead you deeper into debt. Another issue is that you may be living beyond your means, which means you could have a harder time paying off the loan. So, carefully consider why you would like to take out a loan.
How Does a Personal Loan Work?
With a personal loan, you generally borrow a specific amount of money, which is paid back to the lender. The monthly installments are set, and the loan will last a specific amount of time (which is called the term of the loan).
Part of the personal loan agreement also includes a charge for a fixed or variable rate of interest. The interest rate is set by the loan agreement. A fixed rate of interest means that you will pay the same percentage of interest for the life of the loan. Your monthly payments will stay the same over the life of the loan.
On the other hand, a variable rate of interest may go up or down over the course of the loan. If the interest rate goes up, this means you will have to pay more on your monthly installment.
The loan may also require that you make monthly payments via direct debit from your bank account. If the payments are not made on time, you may be required to pay a late fee.
How to Get Personal Loan: The Application Process
It is easy to apply for a personal loan online. Here are the steps you can expect in the application process:
1). Complete an online application with a price comparison website or a direct lender for a specific amount over a set term.
2). Provide personal details; these are used to conduct an affordability assessment.
3). The lender then checks your soft credit and credit score to determine if you are eligible for the loan.
4). You can then choose to use a comparison site to compare personal loans or choose to finalize the application with the direct lender you have chosen.
5). Complete the application and sign the credit agreement. Next, the lender will run a hard credit check, which is recorded in your credit profile. Other lenders will see this information. The information may have an affect on future attempts to obtain a personal loan.
6). The lender will notify you of their decision—if you have been accepted or not.
7). If you are not successful, then it is important to stop and have a consultation with a credit reference agency (such as Clearscore, Credit Karma, Experian, etc.) to see why you were rejected.
8). If you are successful, then after you sign the credit agreement, the lender will deposit the fund into your bank account.
9). You will then be able to use the funds.
10). Next, a continuous payment authority will be established. This is set up repay the loan, plus interest, each month. The first payment usually begins about one month after the loan was issued.
11). Make payments each month until you have paid back the loan and the interest.
12). At that time, your account will be closed. This and your payment history will also be on your credit report for six years.
Where to Get a Personal Loan?
One of the safest places to get a loan is here, on our site. The reason is that each of our lenders appears on the financial services register. This means they are regulated and authorized by the FCA.
In addition, we believe our site is one of the best comparison sites around. Our goal is to help you find and compare the most affordable personal loans available, no matter your situation. We can also let you know which lenders will accept your application before you even apply. What does this mean for you? You have a better chance of being approved and receiving a loan.
The quotes offered on our site are free, and we go the extra mile to protecting your personal data. Plus, you are under no obligation to complete the application. Your credit profile will only be soft checked, as part of the application process. Only once you have chosen to finalise the application with a direct lender will you undergo a full credit check.
Tips to Be Accepted for a personal loan:
1). Choose the amount you would like to borrow.
2). Choose the length of the loan (the time you would like to pay the loan back)
3). Click the “Get Accepted” button
4). Fill out the form, which is completely secure and only takes a couple of minutes to complete. The key here is to be as accurate as possible with all income and outgoings.
5). Wait while we securely send your data to our carefully chosen lenders—this may take about one minute.
6). After this, the lenders will send back their responses. We will show you the results, which are in order from the cheapest product you are accepted for.
7). Choose the lender you would like.
8). Complete your application with the lender. Wait for their decision. If your application is accepted, the funds will be deposited into your bank account.
That is all there is to it! We have worked hard to make sure this process is as easy and painless as possible.
A quick, easy way to get a personal loan today.
Borrow from £300 to £10000.
Choose between lenders who have accepted your application.
Absolutely no fees, ever.
How to Get a Personal Loan with Bad Credit?
Considering a loan is not easy but may be more challenging if you are dealing with less than glorious credit. However, you may still be able to get a lone even with bad credit, though it will be more challenging.
When applying for a low with less than perfect credit, you will still need to answer the same questions lenders ask most borrowers. Be sure to have all the information compiled ahead of time and plan the application before you commit. This can make the process go in a positive direction.
The information lenders generally request includes:
- Your personal details: name/age/contact details/residency
- Current financial responsibilities: rent/mortgage, number of dependents, utility bills, and more
- If you rent or own your home; how much are the payments and when they are made
- Current working hours or situation: part-time, full-time, self-employed, unemployed, etc.
- ID documents and the details of your bank account
The lender may ask for additional information including:
- The purpose of the loan (what it will be used for)
- If you have access to online or mobile banking
- If you are an existing customer for other financial products: insurance, investing, banking, etc.
It is essential to avoid going from lender to lender trying to get a loan. The reason is that not only is this a waste of your time and energy, but it is also more stressful. Not only that, but each application you make appears on your credit profile. Each lender will be able to see that you have tried several times to get a loan and were turned down.
Lenders see several applications over a short time as a red flag. This means they will view you as a high risk and will not want to grant you a personal loan.
While that is the case, by using our site, we can make this process easier and less drastic for you even if you have bad credit. That is because you only apply once. We then taken your application to our lenders, and then they will let us know if they accept your application.
This way, you avoid making several applications with different lenders. Plus, your credit will not be hard checked each time. So, lenders will not see your quotation search that results from soft credit checks. As a result, you stand a better chance of receiving a loan.
What is Interest on a Personal Loan?
As you research personal loans on our site, you will find that each lender has their own interest rate. So, here are some tips to help you avoid choosing higher interest rates:
1). Call lenders to ask them to explain their interest rates. And this is a great time to ask them any other questions related to their personal loan.
2). Remember that APR is not the interest rate. Instead, this is used to show how much the loan will cost your loan, which may include fees and extra charges. This has nothing to do with the interest rate.
3). The interest rate (and the APR) can be fixed or variable. Make sure you understand what this means before taking on a loan. A fixed interest rate means you will pay a specific amount of interest over the term of the loan. This fixed amount will not change. On the other hand, a variable interest can go up or down. If the variable interest rate goes up, then your loan becomes more expensive. This also means your monthly payment will go up.
Personal Loan FAQs
Which banks offer personal loans with bad credit?
While most banks offer personal loans, not all offer loans to individuals with bad credit. Therefore, it is important to consider which lender may be willing to offer a personal loan if you have bad credit. We make this process easy, safe, and fast with our application process.
Keep in mind that while you may receive a loan, the interest is generally higher on a personal loan when an individual has bad credit. Some lenders may offer a secured loan if you have bad credit. However, they will ask for collateral in case you do not repay the loan. Collateral is an asset (something you own) such as a home, car, etc.
What is APR?
APR (annual percentage rate) is the annual rate of interest charged to you for a loan you have received from a lender. APR is a percentage of the yearly cost of funds for the term of the loan. This can include fees or other additional costs involved with the loan transaction. APRs are used for comparison purposes in over to find the best cost of a loan over a year.
The FCA requires all lenders to disclose their APR to a customer before they sign an agreement. Keep in mind that APRs will vary from lender to lender.
Is it possible to have several personal loans?
Yes, there is no specific limit on how much a person may borrow at any one time. However, keep in mind that having more than one personal loan is red flag to lenders. If you are paying out more than is coming in, or you do not have enough to make loan payments each month, then lenders will not give you a loan. In fact, most lenders require their customers to have a certain amount left each month to cover the loan payments and have cash on hand to cover unexpected expenses.
In addition, the more loans you are paying back makes it more likely you will not be able to afford additional loans. And when you apply for multiple loans that you cannot afford, there is a very real risk of damaging your credit score.
Is it best to get a personal loan or a credit card?
That is a hard question to answer and it really depends on your financial situation. Therefore, we created our personal loan application site. We have made it fast, easy, and secure to input your personal data. Then we securely send this to our carefully chosen lending partners. They will send us a response in only a few seconds.
With this information, you can then compare the personal loans of lenders who have said they will accept your application—before you even apply!
Our personal loan application process does not apply to credit cards. However, credit cards can have a large advantage over a loan. With a credit card, you have a revolving line of credit. This means that when you repay the money you have borrowed on the card, you can borrow again, up to your credit limit. And you can do this without the need to reapply for the card each time. In this way, a credit card could be less work than a personal loan.
What if I cannot repay my loan?
Financial problems can come up suddenly. If you are not able to repay the loan, then you need to call and discuss this with your lender. The key here is to be completely honest with your lender. There is no need to be embarrassed — honesty is the best when discussing your situation. In most cases, the lender will want to work with you to find a solution that works for you both. This may mean the lender agrees to freeze repayments for a time, so you have a better chance of getting finances in order. Or they may have another solution.
When you are not able to pay a loan, then there is a high risk of landing in even worse financial problems. This could mean defaulting on the loan, CCJs, or even bankruptcy. Each of these causes a bad mark on your credit profile. If you are not able to pay back a loan, then it is important to reach out and contact the money advice service for free and impartial advice.
What happens to the personal loan if the borrower dies?
If a person dies with debts, then these become a liability for their estate. What does this mean? If the deceased person has money or assets, then these will be sued to pay of any debts they incurred. The debts are paid off until the estate runs out of assets or money. At that point, the remaining debt is usually cleared off.
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