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As with most things, if you’ve never applied for a loan before, you probably won’t know what to expect. What information should you have to hand, and what questions will you be asked? Will you be eligible for the loan?
While no two loan applications are exactly the same, we can help give you a general idea of what details will be requested, and any documents you should dig out before you start your loan application. We’ll also let you know the basic lending requirements for most lenders.
First things first, when applying for a loan, you’ll need to gather a few pieces of information together to ensure you’re fully prepared. These will include a copy of your last wage slip, your latest bank statement and bank details, and the basic figures of your monthly income and expenses. It probably won’t hurt to make yourself a cup of tea too.
Not every lender will need all of this information, but responsible lenders need to ensure that you are financially stable, and will comfortably be able to afford to make the due repayments. So while a lender may not ask for your last wage slip, for instance, they may instead require you to log into open banking. That way they can see your bank statements for the last three months.
If you do need to use open banking, don’t worry – this is not the same as online banking, and open banking doesn’t mean that a lender has access to your bank account – they can only view the information you consent to providing.
Once you’ve gathered your documents together (paper or electronic), you can start the application process for your loan. The first thing asked is usually about the loan details – how much money you need to borrow, and how long for. You may also be asked about your reason for borrowing.
You will next need to enter some personal information, such as your full name, address, and date of birth. The lender will additionally ask for details of your income, including the name of your employer, and how long you have worked for the company. There will also be a section on your expenditure – this will most likely include questions about your housing costs, as well as your grocery, transport and utility costs.
Lastly, there should be a section going through the legal information of the loan contract, which you’ll need to sign, to confirm that you’ve read the terms and conditions.
A lot of lenders ask you for the reason you’re applying for a loan. This is not meant to be a trick question to catch you out, it’s simply another way of determining how long the reason for borrowing will impact you for. For example, if you need a loan to pay for a holiday, this is a short term expense, whereas needing credit to cover ongoing vet or medical bills would be longer term, and will impact your finances for several months.
The key here is just to be honest – the lender doesn’t need to know any of the specifics, especially if your reason for borrowing is more personal. They simply require a general understanding of why you need the loan.
A lot of people who have a low credit score become concerned about eligibility when it comes to taking out a loan. They may have been turned down by more traditional lenders, and therefore believe that unless they are able to improve their credit rating, they can’t get another loan. But this is not the case. Many lenders offer loans for bad credit, though these are often short term loans rather than long term loans.
Short term lenders are more concerned with things like your employment history, income, and monthly expenditure than your credit rating. They understand that often things happen outside our control, which can impact your credit file for a number of years.
As long as you’re able to afford the payments without any difficulty, you should be able to get a short term loan, regardless of your credit score. To be eligible to apply for most short term loans, you will also need to be:
If you’re looking to apply for a short term loan between £300 and £5,000, My Financial Broker can help you get the funds you need. Our online application shouldn’t take more than five minutes to complete, and we’ll then match you with the most suitable lender!