How To Get A Loan

Step 1: Before you start

There are certain criteria you generally need to fulfill in order to get a loan. You need to be resident in the UK, you need to have a steady income, and you often need a decent credit history... if you've got all that, you need to start thinking about what sort of loan you're going to get.

Step 2: Work out how much you need

Work out how much you need – how much you need to borrow and how long you need to borrow it over.

Don't go crazy and overshoot the amount you'll need - you'll have difficulty paying it back. At the same time though, be wary of cutting your loan too short. You need to make sure you're getting enough cash.

Step 3: Do some Research

Research the market place, look at who's offering the loan that's most appropriate for you.
That can be by going to Bank or Building Society or surfing on the net to find companies out there that offer the kind of loan you want.

There are loads of companies out there looking to lend you money - your job is to find one that'll fit your income and lifestyle best. If you want the security of going with a recognised bank, shop around on the high street. However, you may find you can get a better deal online...

Step 4: Decide what type of loan you need

Decide what kind of loan you want – are you going to do it by way of overdraft, fund it through a credit card, by unsecured loan or do you want a secure purpose loan or are you in the market for re-mortgaging?"

If you're only looking to borrow a small amount, it might be worth looking into borrowing money via a credit card or overdraft. This is often simpler than getting bogged-down in a full-on loan.

Overdrafts can be a sensible way of borrowing money -- look at the interest rate to decide between credit cards and overdrafts.

If, however, you're looking for a more sizeable amount of cash -- enough to fund a new car, for example -- you'll need to look at taking out a loan with one of the many loan providers on the market. For a very large amount, you may need to secure your loan against your house, which means they can repossess it if you don't keep up with repayments.

Step 5: Look at the Interest Rate and APR

Look at the interest rates that are available over the marketplace both in terms of the plain vanilla rate and what fees might be payable, look at the APRs to find the most affordable loan for you.

The interest rate and the Annual Percentage Rate - or 'APR' - are the two figures you need to look at. Don't be fooled by deals that look good to rope you in, only to change to something unmanageable after the honeymoon period's over.

APR expresses how much the loan will cost the consumer overall, expressed as an annual percentage of the size of the loan. APR makes it easier to compare lenders and the loan market as a whole.

Step 6: Take a step back

Stand back when the paperwork arrives and make the decision about if this is right for you."

Taking out a loan is a big decision. You're putting yourself in debt, which means you're in someone else's pocket. Ask yourself if you really need the cash, and if it's a secured loan, ask yourself if it's really worth risking your home over...

There's a lot of small print there, but there are some key boxes you need to look at, which is the amount of the loan, the APR and how much the monthly repayments are and how long it's over. So make sure the documentation reflects the discussions you've had.


If you're 100% happy that you've got the best possible deal and you can comfortably keep up with the repayments, you're ready to sign on the dotted line.