INSTANT DECISION LOANS

No loan is entirely guaranteed and will depend on your credit score and how well you’ve managed credit in the past. If you have a history of bad credit, improving your credit score over time will improve your choices of loan deals, and your chances of being approved.

If you don’t have proof of income you may find it harder to be approved for a loan. Lenders usually prefer you to have a stable job, to prove you have a way to pay the loan back and meet your repayments in good time. You may still be able to get a loan without proof of income, but you’ll likely face higher interest rates.

If you’re unemployed, you may still be able to get a loan but your options will be more limited. Most lenders will refuse to offer you credit if you don’t have a reliable source of income. If this is the case, you’ll probably need to find a specialist lender - and usually interest rates will be high.

Comparing instant approval loans won't affect your credit score. This is because lenders only carry out a soft credit search as part of their pre-approval process.

However, if then go on to formally apply for a loan you will trigger a hard credit search. This could damage your credit score.

Lenders will need to run a credit check to ensure you're eligible for any sort of borrowing. But you can check how likely you are to be accepted for a loan by just entering a few details and telling us about personal circumstances. That will only trigger a soft credit check that won't affect your credit rating.

It's fair to say that if you've got no credit history, or bad credit history, your chances of being accepted for a loan are reduced.

That's not to say that you've got no chance. Your best bet is to tell us a bit about yourself and we'll be able to give you a good idea if you're likely to be accepted for loan.

If it emerges that you're unlikely to be accepted for credit, we'd suggest you take some steps to improve your credit score before reapplying.

Many households are struggling to make ends meet as the cost of living keeps rising. There's little spare cash around to build up an emergency fund, which means it can be tricky to pay for a new washing machine or boiler if your old one breaks down. Maybe you need a new car, or perhaps you're planning a holiday, a wedding or a home makeover?

Let’s face it, most people at some point in their lives need to borrow some money. So it’s important to understand the pros and cons of the different types of loan, as well as how to secure the best rates. If not, you could end up with a poor deal – and costly credit can send you into a downward debt spiral.

Loans can broadly be divided into two categories: secured and unsecured. With a secured loan, the lender will insist on some sort of security against the money you borrow, often a house or car. If you default on the payments, the bank or building society can then sell the asset to clear the debt.

You can usually borrow large amounts with a secured loan, and at a lower rate of interest. Plus, you can pay back the debt over a long time period, perhaps 10 or 15 years.

However, secured loans are more risky than unsecured loans because you could lose your collateral if you cannot clear the debt. You should therefore think very carefully - and consider other options - before taking out a secured loan.

You can typically borrow as little as £1,000 up to a maximum of £25,000 with an unsecured loan – also known as a personal loan.

The interest rate is usually fixed and you pay back the debt over a set term, normally one, three or five years. Personal loans can therefore help you to budget because you know at the outset the full cost of your borrowings and how long they will take to clear.

For example, if you are getting married and the wedding is set to cost £7,500, you could take out a loan for £7,500 at 3% over three years. Your monthly payments would be fixed at £217.98 and you would pay total interest of £347.11 over the 36-month term.

Representative example: If you borrow £7,500, you would make 36 monthly repayments of £217.98. The total amount repayable is £7,847.11. Representative 3.0% APR, 3.0% (fixed) p.a.

If you have run up other debts at high rates of interest, a personal loan can be a good way to manage your borrowings and bring down the cost. Let’s say you have built up a debt of £3,000 on a store card that charges interest of 29%. You could take out a loan for £3,000 at, say, 9%, to pay off the store card balance and reduce the monthly payment. If you also cut up the store card, you would not be tempted to go on a spreading spree and add to your debt burden!

Interest rates on personal loans vary across the market, but as a rough rule of thumb, the more you borrow, the lower the rate. For example, you might pay interest of 9% on a £3,000 loan, but only 3% on a loan of £7,000. It can therefore make sense to borrow a larger amount, say £7,000 instead of £6,500. Just make sure you don’t take on a debt that you cannot afford to repay.

The size of the loan will to some extent determine the term of the loan. It is, for example, difficult to pay off a £7,000 loan in just one year as the monthly payments would be relatively high. However, if you borrow only £1,000, a term of 12 months is more manageable.

You also have to consider the cost implications of the loan term as the longer the term, the lower the monthly payments – but the higher the total cost.

The interest rates on personal loans depend partly on the loan amount and term. But lenders also assess your creditworthiness, usually by looking at your credit file.

The lowest rates are reserved for the best customers – that is, borrowers with a spotless credit record. If you are judged likely to default on the loan because of a poor credit history, you will be charged a higher rate of interest or your application will be turned down.

In other words, there is no guarantee that you will qualify for the advertised rates. Lenders are allowed to boast of low representative rates if those rates are charged to 51% of successful applicants, which means almost half could be charged a higher rate.

You can pay off your debt before the end of the loan term if you come into some cash. But watch out for early repayment fees. Many lenders levy a penalty for early repayment, which could wipe out any potential interest savings. Some lenders also charge arrangement fees for personal loans, which you should factor into your cost calculations.

Many people use loans to pay for important life events and essential big-ticket expenses such as home improvements, a wedding or financing a car purchase, but before you apply for a loan, ask yourself: 

• Do I need it? If you’re using the loan to pay for something that’s not urgent, such as an expensive gift, then maybe consider if a loan is necessary 

• Can I afford the repayments? You must pay back your loan, which will be the loan amount plus the interest rate. You can use our loan calculator to get a rough idea of how much the loan will cost you. 

• Will I keep up with the repayments? If you’re unable to keep up or make late repayments, you’ll damage your credit score which will make it harder to borrow in the future 

At the time of writing (April 2025), the Bank of England base rate stands at 4.5%, after the MPC opted for a quarter-point cut on 6th February 2025.

The future direction of rates is uncertain. But it's widely expected that we could be in for further small cuts at some stage this year, after the Office for National Statistics' Consumer Prices Index showed that inflation tapered to 2.5% in December 2024.

However, right now rates are still significantly higher than they were just a few years ago and will likely stay that way in the near term.

Higher interest rates make it more expensive to borrow but shopping around, considering specialist lenders, and improving your credit rating can all make the final loan rate cheaper.

Avoid borrowing money without thinking carefully whether you need it, and whether the cost of the loan is worth what you’re taking it out for.

For example, it’s probably not a good idea to take a loan out for everyday purchases – a credit card might be more suitable.

Work out how much you can afford to borrow and pay back before applying for a loan. This way you can look for loans in your borrowing range, giving yourself the best chance of being accepted as well as ensuring you don’t take on a financial commitment that you can’t afford – try our loan calculator for guidance.

If you're on a variable rate deal, repayments can change whenever the lender decides to change it – often lenders will use the Bank of England base rate as a guideline. While this means that your repayments could be less if the base rate falls, they could also go up if the rate rises, so consider if interest rate fluctuations are worth the risk before taking out a variable rate loan.

Loan sharks should always be avoided – they’re illegal, not regulated by any financial organisations, and they generally charge massively high interest rates. What’s more, if you aren’t able to repay them you may be pressured into borrowing even more money, which could lead to a spiral of debt.

Payday loans may be legitimate, but they can come with incredibly high interest rates sometimes reaching over 1000% - which could make even a small loan turn into a debt spiral. Learn more with our guide to payday loans.

Every application you make, just like credit applications, leaves a mark on your credit report.

Too many of these will give lenders the impression that you are desperate to take out a loan, which could imply that you’re struggling to manage your finances – as a result, lenders may be more reluctant to let you borrow from them in the future.

Use our eligibility checker to run a soft search and find lenders with a higher chance of acceptance, including preapproved.

As part of the loan application process, potential lenders will perform a credit check. Bad credit doesn’t mean you won’t be able to get a loan, however, it will make it harder to be approved and you may end up with a worse rate.

If you can, consult your credit report and take short-term steps to boost your credit score like registering to vote or addressing errors on your credit file.

Improving your credit rating can help you secure better loan rates and boost your chances of pre-approval.

If you're borrowing smaller amounts of money and can't dip into your savings, you might be better off with a credit card or an arranged overdraft.

• To clear credit card balances, consider a balance transfer credit card.

• To make a large purchase, consider a 0% interest credit card.

• To clear an unarranged overdraft, consider a money transfer credit card.

• To tide you over til next month, consider an arranged overdraft with your current account provider, or switch to an account with overdraft facilities.

You work hard to earn your money, and we don’t think you should waste a penny of it paying over the odds on your household bills. That’s why at MoneySuperMarket, we’re on a mission to save Britain money.

• Whip your credit score into shape with Credit Score

• Super save over and over again with Energy Monitor

• There are always more ways to save with MoneySuperMarket 

So how do we make our money? In a nutshell, when you use us to buy something, we get a reward from the company you’re buying from.

You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.