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We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
By Matt Fernell, Editor-in-Chief at Finance.co.uk.
Getting a loan online can be a quick and simple way to access money when you need it. Here’s everything you need to know about getting an online loan that works for you.
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We’ve partnered with Loans Warehouse, whose award-winning service can help you find the right loan.
So you can get the right loan for your needs, you need to think about:
How much you need to borrow: You can borrow from £1,000 to £50,000 with most online loans.
The loan term you want: Your loan term will affect your monthly repayments and how much interest you will pay overall.
Your credit score: Lenders will check your credit record when assessing your application, and if you have a low score, you could be rejected.
If you really need a loan: Getting a personal loan can be an expensive, long-term commitment, so make sure you really need the money before applying.
Any loan you can apply for over the Internet can be referred to as an online loan. The application process takes place entirely online, which means there are no paper forms to fill out and send off, and no face-to-face interviews are required.
When you apply, you enter all your details, including information about the loan you want. The lender will then carry out a credit check to ensure you meet their criteria and your details are correct.
Loans you can apply for online include:
You can’t usually apply for a secured loan entirely online. This type of loan uses your home as security, and you may need to speak to the lender and send in extra documentation to support your application.
Most lenders will also usually request a valuation or survey of your property to check its value and condition. This means it can take a couple of weeks or longer to get a secured loan.
It can be possible to get a loan if you have a poor credit record; however, your options will be more limited.
When you apply online, the lender will check your credit score, and if it is below their criteria, they may:
Decline your application
Offer you a loan with a higher interest rate
Loan providers look at credit records to gauge how likely you are to keep up with your repayments. Therefore, they will consider you a higher risk if you have a lower credit score.
That means finding a bad credit loan online can be more difficult, but it’s not impossible. Some lenders specialise in offering loans for borrowers with bad credit but usually charge much higher interest rates.
When you get loan quotes with us, we perform a soft check on your credit record, which means we only show you rates you’re eligible for. That means you can find the best loan rates available to you and apply with confidence.
The application process for a personal loan can take a few minutes, and you should get a decision straight away, provided the lender has all the information they need.
Once approved, you can receive the money in your bank account on the same day, depending on how the lender transfers the funds.
Quick application process
Easy to compare loan rates side by side
You can receive the money on the same day
You can manage your loan online
Keeping up with repayments can boost your credit rating
Some online loans come with hidden fees
Interest rates can be higher compared to other forms of credit
Difficult to borrow with poor credit
You may face expensive fees if you miss payments
Higher risk of being the victim of a scam
Here are some other borrowing options you should consider before getting a loan online.
A 0% credit card allows you to make purchases for a set term without being charged any interest on what you borrow.
The interest-free period is usually between 12 to 18 months, meaning you can borrow what you need and repay what you've spent in monthly instalments. This means you could borrow without paying any interest if you use the card sensibly.
You usually need a good credit rating to get a 0% card, but they're an option worth exploring because they can be a cheaper way to borrow than a loan.
You can apply to add an overdraft to your current account, which allows you to spend more than your available balance. This is effectively a way of borrowing directly from your bank when needed.
Before using an overdraft, check the interest that is charged and any additional fees. If you have an arranged overdraft, you will be charged a set interest rate when you use it. However, if you borrow more than this, you could be charged expensive fees in addition to the interest.
Using an overdraft can be an expensive way to borrow, so it’s worth only using one in an emergency and clearing it as soon as you can.
A secured loan is a loan that uses a valuable asset, usually your home, as security against what you borrow.
This added security for the lender means you can borrow much higher amounts with a secured loan, and the interest rate can be lower. However, If you can’t keep up with your repayments, the lender could repossess your home to cover their losses. Find out more about how secured loans work here.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
APR is short for Annual Percentage Rate, and it shows the overall cost of your loan.
Any extra fees or charges are added to the loan amount before APR is calculated.
It's a legal requirement for credit lenders to show their APR so an easy and fair comparison of interest rates can be made between lenders.
The best personal loan rates are currently just below 6% APR, but they can also be as high as 100% APR.
The best personal loans will be the ones with the lowest APR, although these may not be accessible to everyone. To help you get the best deals, work on improving your credit score.
Most personal loans will allow you to repay your loan early, but some won't. If you can repay your loan earlier than originally agreed, you will have to pay a fee known as an early repayment charge (ERC).
The amount you’ll be charged is usually based on your remaining balance, so the closer you are to clearing your loan, the lower the fee will be.
When you apply online for a loan, it is possible to get the money within hours or even minutes of applying.
However, you can only get the money this quickly if all your information is correct, you pass the eligibility criteria, and the lender is able to transfer the funds that day.
No - all regulated loan providers in the UK will perform a credit check when you apply for a loan. They do this to assess your finances and to work out if you are a reliable borrower.
If you find a lender promising to offer you a loan without checking your credit record, you should avoid them.
Every time you apply for a personal loan, it will leave a mark on your credit report. A personal loan on your credit report shouldn't affect your future eligibility as long as you’re responsible.
Personal loans can improve your credit rating if you manage your repayments well and make them on time. However, if you miss repayments or default on your loan, your credit rating will suffer, making it more difficult to get credit products in the future.
