Loan Application

The process of applying for a loan may seem confusing, with checks here, credit reports there, and an overwhelming array of loan options to choose from, know exactly what to expect when you decide to take out a loan can help you to feel more comfortable with the process, and allow you to understand what is happening along the way so you can be sure that you are happy with things every step of the way.

If you are looking to apply for a loan, but don't know how, then this guide is for you. The first step in getting a loan is deciding how much you need to borrow, and for what purpose.

Deciding on the amount comes down to how much you really need - don't borrow more than you need, as it will cost you money, not only that but the lender will take into account what you can afford to repay when they decide whether to approve your loan or not.

Be realistic with your borrowing requirements, a rough guide is to work out your monthly disposable income, and take no more than half of this as being an affordable monthly loan repayment. Now divide your desired loan amount by the number of months you intend to repay it over - if the result is higher than the affordable repayment you just worked out, then you will either need to lower your expectations, or extend the repayment term.

Once you have an idea of how much you want to borrow, and over what time frame you can afford to repay it over, it's time to find a lender. There are a large number of loan providers in the UK, so finding one shouldn't pose a problem - where the issue lies is in finding one that meets your needs, and offers a competitive interest rate. As with most things, spending the time to shop around is worthwhile, and comparing lenders is quite straightforward as they are all required by law to clearly display the APR of their loans to allow for direct comparison. Remember, the lower the APR, the less the loan will cost. We will come back to how to find a lender later on.

After finding the lender, the next step is to complete a loan application - the vast majority of lenders now have online application forms, making the loan application easy and convenient. You will usually be asked to provide a few personal details, like name and address, and whether you are employed and/or a homeowner. Obviously you will also need to tell the lender how much you wish to borrow. This information will then be sent through to a loan arranger at that particular lender.

Once your application has been received, the loan arranger may contact you to get a few more details and discuss your needs first, or they may simply carry out the credit check before talking with you. The credit check is where the loan company looks into your financial history, this part of the process is often misunderstood, with people talking about credit ratings and such. The truth is that the lender will simply check the applicant's credit report, which details their borrowing record, housing status and certain information from the electoral roll. From this, combined with the applicant's employment status, the lender will apply certain methods to determine whether to approve the loan or not.

Providing you are approved for the loan, the lender will then contact you to finalise the details of your loan, and the money will be either deposited straight into your bank account, or sent in cheque form a few days or so following the approval.

Depending on the exact details of the loan (which will be clearly given to you by the lender), the repayments on the loan will usually begin the following calendar month, and continue until the full amount plus interest has been paid.

Hopefully this makes the whole process clearer, and you are now no longer wondering how to apply for a loan, but rather are ready to find a lender to apply with - well this is where we can help you, simply fill out our short application form and we will find a selection of top lenders based on your needs.