Applying for a loan
13th February 2026
By Simon Carr
Applying for a loan
There are several factors to consider when you apply for a loan. This guide will take you through the steps of applying for a loan.
Should I apply for a loan?
To decide if a loan is right for you, consider the following factors before you take out a loan:
- Is borrowing the right option? You need to ensure you’re able to repay the loan. If not, you could consider saving the money instead. And if you’ve struggled with debts before, you need to carefully consider whether it’s the right option to take out a new loan.
- Know your credit score. When you apply for loans, lenders will run hard checks, which are recorded in your credit history. So, if you’ve been rejected for a loan recently, it might be better to improve your score before applying again.
- Advertised rates are not guaranteed. Lenders need to offer their advertised rate to a minimum of 51% of applicants, meaning many people may be offered higher interest rates. Lenders will assess your financial situation and credit score to decide the interest rate.
- Consider the fees and any other charges. The fees and charges depend on the lender, so you need to check the possible costs for admin fees, late payment fees, and early repayment fees.
How to apply for a loan?
To apply for a loan, it’s straightforward. First, you need to decide how much you can afford to borrow by comparing deals. The below points cover the steps involved when applying for a loan:
- You need to decide how much money you need. For emergency funds, you may need a smaller fund, or for larger purchases, like buying a car, you might need a bigger sum. You should try not to borrow more than you need to avoid paying excessive interest rates.
- Decide how soon you will be able to pay off the loan. You need to consider whether you can repay the loan quickly or might need a few months to a few years. Remember that interest will add up over time which could end up costing you more.
- Be prepared to share your personal and financial information. Lenders will ask you to provide proof of your income to ensure you can repay the loan.
- Check the eligibility criteria of each loan type so you can understand how likely your approval rates are.
- Pick a lender. Each lender will offer different deals and rates.
- Receive the loan sum. Once your application has been approved, you can expect the money in your bank account. You should check with the provider how long it may take to receive the money.
Am I eligible to take out a loan?
The eligibility criteria to take out a loan will differ between lenders, but generally, you will need to show the following:
- Proof of address. You need to be a UK resident. Lenders may also want to see your address from the previous three years.
- You need to be over 18 years old. Most lenders will need to see your date of birth.
- Proof of income. You’ll need to prove to lenders that you have enough money to repay the loan.
- Lenders may also check expenses, such as other loans or childcare costs.
- Assessment of your credit score. Lenders will check your credit score. If your credit score is low, you may receive more expensive deals and might not be able to borrow as much.
- Lastly, loan providers have specific criteria, and some can be stricter than others.
What happens after I apply for a loan?
After you apply for a loan, the lender will run some checks. They will consider the following information:
- Your credit history
- Your application details
- Any information the lender may already have on their system
- The provider’s criteria
Sometimes, you may get an answer within a few hours as they may use an automated process.
When your application is accepted, the lender will send you the terms of the loan and the interest rates they will offer. If your application is refused, another lender may accept you because they all have different criteria. But allow some time between each application to avoid lowering your score.
How long will it take for a loan to show on your credit history?
This may take about four to six weeks. If you’ve taken out a loan recently, it might not show on your history immediately.
Taking a loan out with bad credit
You may have a limited choice of loans if you have a low credit score or no credit history.
Some providers specialise in offering loans for bad credit. They are for people with low or no credit history, so it may be more straightforward to get accepted. Remember, they may have higher interest rates and limits to how much you can borrow.
Can I take out a loan if unemployed?
You can apply for a loan even if you’re unemployed but might have restrictions on the availability of deals. Also, you may not be able to borrow a large sum and face higher interest rates.
Lenders usually assess your financial situation to ensure you’re able to repay the loan, so having a regular income helps.
If you receive benefits, you may be able to get a government loan. You may be eligible for a ‘budgeting advance’ loan if you claim Universal Credit.
The budgeting advance is helpful to cover various costs, such as replacing a broken household item or covering your expenses when applying for a new job. You will need to meet the eligibility criteria, and your Universal Credit will be reduced to cover your repayment.
Can I take out a loan if I’m self-employed?
You can get a loan if you’re self-employed, but the process is slightly different. Usually, you need to show your one-year income. The eligibility criteria differ between lenders; some may ask for more, while others exclude self-employment income. To lower your chances of rejection, check the details for each lender.
Improve your chances of approval
Improving your credit score is one of the best ways to increase your chances of loan approval. So you should take the appropriate steps to improve your overall score.
If you have a limited credit history, it may be worth concentrating on building your score.
You should also consider the eligibility criteria for each loan to increase the likelihood of approval.
Talk to a Promise Money adviser for more details