A loan can give a helping hand – for a new car, home improvements or your dream wedding. But taking out a loan is a big financial commitment. You’ll be paying interest on your borrowing and personal loans can last a number of years. It’s important to think about the process of applying for a loan and what it’s going to cost you.
Before you begin your application, you should consider the following questions to make sure a loan is the right option for you:
When applying for a loan, lenders are likely to ask for the following information to support your loan application:
Applying for a loan is usually a straightforward process. Decide how much you want to borrow then you can compare deals with MoneySuperMarket. We’ll show you loans from leading providers across the market by term and amount, to find the best deals to suit your needs.
Here, we’ve outlined the step-by-step journey to applying for a loan:
A loan can be a way to help you afford something sooner - to pay for a holiday or to consolidate existing debts, for example.
While it’s always cheaper to pay for something outright – especially if you’ve struggled with bad credit in the past, a loan can serve as a helping hand if you’re looking to spread out the cost of a larger purchase or need access to money quickly.
You can use a loan for a range of purposes including: spreading the cost of a car, to help make home improvements, to buy a property more quickly (by using a bridging loan), to help pay for a wedding, to help fund your next holiday and to help consolidate existing debt to reduce the interest you pay.
How much you can borrow will vary by provider and your credit history – some lenders may be hesitant to lend you a large sum if you’ve struggled with debt in the past and have a low credit score.
The typical loan amount can be anything from £1,000 to £15,000, depending on what you’re using the loan for. If you’re looking for a loan larger than £15,000, it’s possible you may need to look at secured loans rather than a personal loan.
A secured loan involves putting up a valuable asset, such as your car or home, as security in case you struggle to pay the loan back. But remember with a secured loan, if you can’t repay the debt you could risk losing your home.
How long you can borrow for (the term of the loan) can make a big difference to you monthly repayments. The longer the term, the smaller your monthly repayments will be, but you’ll be paying off your loan for longer - and you’ll pay more interest overall.
The below table shows the average amount that people borrow for different loan terms:
Loan term (years)
*Data collected between January and September 2021, accurate as of October 2021
If you’ve had debt problems in the past, or have a low credit score, your choice of loans could be more limited. But this doesn’t mean an instant ‘no’ to getting a loan.
There are specialist providers that offer loans for bad credit, aimed at those with a poor or limited credit history so it’s easier to be accepted. But they tend to have higher interest rates and lower borrowing limits than standard loans.
With MoneySuperMarket, you can compare loans for bad credit from across the market. We perform what’s known as a ‘soft search’ to see what loans you could be eligible for – and searching won’t affect your credit score.
Looking to improve your credit score? Our free credit monitor service can help by showing you your credit rating and offering tips on how to boost it to unlock better loan deals.
While you may struggle to apply for a personal loan while on Universal Credit, you may be able to get an emergency government loan if you are receiving this benefit. For those claiming Universal Credit it is known as a ‘budgeting advance.’
A budgeting advance can be used for specific costs, such as replacing a broken fridge or expenses involved in getting a new job. Eligibility criteria will apply and you’ll repay the money through reduced payments to your Universal Credit.
Once you’ve completed your application your chosen lender will conduct a credit check to assess whether you’ll be able to pay back the loan. It’ll use information from your credit file to make a decision and - if it agrees to advance you a loan – what interest rate you’ll get. The better your credit history and score, typically the lower your loan rate.
If you’ve been accepted the lender will send you the loan agreement – usually either electronically or by post – for you to sign and send back. You should receive the money in your account within a few days.
Applying for a loan can feel like a guessing game – it’s hard to know whether you’ll be accepted and what deal you’ll be offered. But by comparing loans with MoneySuperMarket it’s quick and simple.
We compare loans from a wide range of lenders across the market. And for each loan, we'll show you your chances of being accepted. Searching for a loan with us won’t affect your credit score.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.