Loans

Usually, applying to a lender is the only way to know if you'll be accepted for a loan. Yet that marks your credit file, and could affect your ability to get future credit. Our Eligibility Calculator uses a 'soft search' to calculate and show your chances of acceptance before applying.

You'll need to pass a credit check to get a credit card. This lets the lender work out how 'risky' you are to lend to, and takes into account your income and other financial commitments. It can then either accept or decline you.

The criteria differs between lenders – you could be accepted by one but declined by another. So it’s better to use an eligibility checker to check your chances of acceptance before applying.

If you go on to apply, any application will leave a mark on your credit report, even if you’re declined, which could affect your ability to get credit in future (this is especially true if you make multiple applications in a short time period). Read our guide to how credit scoring works for full info.

A secured loan is where you put up some kind of security – such as your home – when taking out the loan. This is why they're often known as homeowner loans - if you don't have a home to put up as security to back the loan, you won't be eligible to get one. They can be easier to get than unsecured loans (where you don’t have to put up an asset as collateral), but are much riskier for the customer. This is because the lender could end up repossessing the asset in the event that you can’t pay back the loan.

Most high-street personal loans and all the best buy loans we list on our How to get a personal loan guide are unsecured.

When it comes to personal loans, lenders will typically offer loans of between £1,000 and £25,000, though some will offer as high as £50,000.

The amount you can borrow will depend on a number of factors, including your income and employment status, your outgoings and whether you have any other outstanding debts. Compare loan options in our How to get a personal loan guide, where we list the top rates by amount borrowed.

The term of a loan dictates the length of time you have to pay the money back. Term lengths differ between lenders, but generally you can get a loans from between one and seven years. Some lenders also offer loans with longer terms, typically when the loan amount is very high.

APR stands for ‘annual percentage rate’, and is is used by lenders to tell you the cost of borrowing.

Where personal are shown as having a 'representative APR', it means only 51% of successful applicants must be given the stated rate. The other 49% could get a different rate (usually higher) – and some people will be rejected altogether.

Lenders must tell you what the APR is before you sign a credit agreement. Read more about how interest rates work.

Having a bad credit score usually means you've not managed credit well in the past (or that you've had very little credit before).

It could be that you have a history of missing payments, for example. And this is likely to mean your chances of getting approved for a loan are low.

And if you've no credit history at all – perhaps you’ve never borrowed – you could also find it difficult to get approved, as lenders will have no idea whether or not you’ll pay them back. It's like someone you don't know asking to borrow cash.

There are ways to improve your credit history, or build it from scratch. Read more on how to boost your creditworthiness.

If you miss a loan repayment, you could be charged extra interest or fees by your lender which will increase the overall cost of borrowing. If you continue to miss repayments your lender will report it to credit referencing agencies and it will go on your credit file for six years, potentially impacting your chances of being accepted for other credit in that time (such as credit cards, other loans or mortgages).

If you have a secured loan, continued missed payments could put assets such as your house at risk.

You could get rejected for a loan for a number of reasons – it’s a murky business as lenders are not required to tell you why they've decided to turn you down. It could be down to you having a bad credit history, or if they think you'll be risky to lend to.

Unfortunately, if you're rejected for a loan this will usually have an impact on your credit score – especially if you make multiple applications in a short space of time. That’s why we suggest using our Eligibility Calculator to check your chances of being accepted for personal loans from a wide array of lenders, without endangering your credit score.

The first thing to do is contact your lender and explain the situation, as they might agree to pause your repayments or reduce the amount you owe. This is not guaranteed however – see our Debt help guide with your full options when struggling to repay debts, including ways to make your debt cheaper and free debt help services and charities if you need extra help.

This depends on your lender's policy – some will charge fees (typically of one or two months' interest), others won't. Check the terms of your agreement to be sure, and if you're planning on repaying all or some of your loan early, or refinancing at a cheaper rate, contact your lender to ask how much it will cost to settle. All lenders must allow you to pay off your loan in full if you want to. Read more about repaying your loan early.

When you apply for credit, a lender will use credit agencies to check through your credit score and history before they decide whether or not to lend to you. If you've a history of missed or late payments, or have never accessed credit before, they may be less inclined to lend you money. Credit checks will all go on your credit file, and if you have multiple failed applications, it could impact your credit score and your ability to get credit in future. See Credit scores for our top tips to boost your creditworthiness.