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Loans

Guides and tools to help you get a loan or cut costs

Am I eligible 
 for a loan? 

If you're happy you know what you're doing with loans, our eligibility calculator can tell you how likely you are to be accepted, without impacting your credit score. Yet if you're not sure, it's best to read more on loans – this page will help you find the right guide.

Use our eligibility calculator

What is a loan?

A personal loan is where you borrow a sum of money from a lender, and agree to pay it back, plus interest, in fixed monthly repayments over an agreed time period.

Yet only borrow if you NEED to, you've budgeted for it and you're sure you can repay. 

Read our guide on cheap personal loans

Watch: Martin Lewis explains personal loans

  • Check a loan is right for you. Only borrow if it's for something you need, and you can afford the repayments.
  • If in doubt, DON'T borrow. And if struggling with debt, read our Debt help guide.
  • Borrow as little as possible and repay it as quickly as possible. It's cheaper as you pay less overall.
  • A credit card could be cheaper. 0% spending or 0% money transfer cards could undercut loans for smaller amounts.

Watch the video or... 

Read our full loans guide

How do lenders decide whether to lend to you?

The lender uses the info you give it in your application form about your financial situation and income, and info it gets on you from a credit check, to decide if it wants to lend to you. Making an application will leave a mark on your credit report – even if you’re declined – which could impact your ability to get a loan or other credit in future.

So before jumping in, it's better to use our eligibility calculator as it'll allow you to check how likely you are to get a loan, without affecting your ability to get credit in the future.

Try our Eligibility Calculator

How do credit checks work?

When you apply for a loan, the lender will look at your credit report at one or more of the UK's three credit reference agencies before deciding to lend.

Each agency has data on your existing credit accounts, recent applications, how much you owe and whether you’ve repaid other credit on time. Lenders use this info to try to predict your future repayment behaviour.

Then, each time you apply for a loan, it’ll be marked on your credit file.

Find out more about how credit scores work

Loans FAQs

  • Am I eligible for a loan?

    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.

  • How do lenders decide whether to give you a loan?

    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.

  • What’s the difference between a secured and unsecured loan?

    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. 

  • How much can I borrow?

    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. 

  • How long can I take out a loan for?

    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.

     

  • What does APR mean?

    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.

  • What if I have a bad credit score?

    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.

     

  • What happens if I miss a loan repayment?

    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.

  • What happens if I'm rejected for a loan?

    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 Loan Eligibility Calculator to check your chances of being accepted for personal loans from a wide array of lenders, without endangering your credit score.

  • What should I do if I need help to pay my loan?

    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. 

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