How to Apply for a Loan
Imagine you’ve found the perfect home to renovate or that dream car you’ve always wanted. The excitement is palpable, but so is the realisation that you don’t have the funds to afford it.
You’re going to need to apply for a loan.
The process of applying for a loan is generally straightforward, but it’s important to understand what to expect and what you can do to improve your eligibility.
Whether you’re looking to consolidate debt or finance a big purchase, this article will explain how to navigate the application process and hopefully increase your chances of approval.
Written by: Hannah O Neill
Financial ExpertLast updated: 05/02/2025
Is a Loan the Right Choice for You?
Before applying for a loan, take some time to consider whether it’s the best option for your personal circumstances. Here are a few things to think about:
Affordability: Make sure you can pay the monthly repayments on time and in full to avoid damaging your credit score and affecting future credit opportunities. Review your monthly income and expenses to check if you can afford each monthly repayment, and consider any potential changes in your financial commitments during the loan period so that you don’t miss loan repayments.- The impact on your credit score: Each credit application leaves a hard mark on your credit file, which can temporarily lower your credit rating. Space out your applications and double- and triple-check your eligibility so you only apply to borrow the money you’re likely to get.
- Different types of loans: Check out the different types of loans available, such as secured loans, personal loans, and guarantor loans. Decide on the rate type (e.g., fixed or variable) and research to find the right fit.
- Comparing loans: Compare loan products from different lenders and check their terms, features, and representative APR (annual percentage rate) carefully.
What you need to include on the loan application form
Once you find the right product for you, you can typically apply for the loan online. For example, you can apply through the Believe Money website or directly through the lender’s site.
Alternatively, you can apply in person at a lender’s branch, which can be helpful if you need assistance with the application form.
Be truthful in your answers. This information helps lenders verify your identity and assess your financial situation to decide if lending to you is a good idea.
- Full name
- Contact information
- Date of birth
- Marital status
- Employment status and job title
- Salary and household income
- Other financial commitments
- Living costs
What Happens After You Submit Your Loan Application?
Here’s what happens after you submit your loan application through Believe Money:
Initial Review and Soft Credit Check
First, your application undergoes an initial review. Believe Money will conduct a soft credit check, which helps verify your identity and get an overview of your financial history.
This check doesn’t affect your credit score but gives the lender an idea of your creditworthiness. It’s a key step in determining whether to move forward with your application.
Pre-Approval Offer
If the initial review looks good, you might receive a pre-approval offer. This isn’t a final commitment but indicates that, based on the preliminary information, you’re likely to qualify for the loan.
The pre-approval will outline potential loan amounts and terms, giving you a clearer picture of your borrowing power.
Document Submission and Hard Credit Check
Next, you’ll need to provide supporting documents such as proof of income, employment details, and any other financial obligations.
The lender will then perform a hard credit check, which will be recorded on your credit report. This comprehensive check is essential for confirming the accuracy of your information and further assessing your ability to repay the loan.
Final Approval and Loan Offer
After reviewing all your documentation and the results of the hard credit check, the lender will make a final decision. If approved, you’ll receive a formal loan agreement offer detailing the loan amount, interest rate, and repayment schedule, including your fixed monthly payments.
It’s important to read through these terms carefully and make sure they fit your financial situation and goals.
Only once you’re happy, should you accept the loan.
What If Your Application Is Declined?
If your application is declined, it’s important to understand why. Common reasons include a low credit score, insufficient income, or not meeting the lender’s specific criteria.
Addressing these issues, such as improving your credit score or providing more accurate information, can improve your chances when you apply again.
How Soon Can I Have My Money?
Once you accept the loan offer, the funds will be disbursed to your bank account. The time it takes to receive the money can vary.
Some lenders might provide same-day transfers, especially for online applications, while others could take a few business days.
If you’re working with a bank you already have an account with, the process might be quicker.
- Banks: Existing customers with a bank account might receive funds the same day, typically within two business days. New customers may wait two to five business days.
- Online Direct Lenders: Known for speed, they often transfer funds within one business day.
- Guarantor Loans: These can take from one business day to two weeks due to the involvement of a guarantor.
- Credit Unions: Payment times vary, often taking a couple of weeks.
Personal contract hire
Last but not least is personal contract hire. These agreements allow people to get a brand new or barely used car and pay back a set amount to use it each month. While other car loans work on a pay-to-own basis, PCH agreements mean you only rent it.
Once you pay the deposit, you can choose the maximum yearly mileage allowance and be responsible for maintaining the car. However, it’s a great solution if you want to drive a brand-new car without a big financial commitment.
Pros of PCH:
- PCH is one of the more flexible options
- You don’t have to worry about high-interest rates
- It’s more convenient than a long-term rental
Cons of PCH:
- You’ll never own the car
- After the rental term finishes, you’ll need to find a new contract
I Have Bad Credit, Can I Still Apply a Loan?
It’s possible to take out a loan with a poor credit history, but expect lower loan amounts and higher interest rates to mitigate the lender’s risk. Be aware that applying for a loan may further lower your score.
As a specialist finance broker, we have access to a range of lenders who will consider all credit profiles.
What Can I Do to Improve My Chances of Being Approved for a Loan?
Being proactive about improving your personal circumstances can make you a more attractive candidate to lenders:
Check and Improve Your Credit Score
Your credit score plays a huge role in your loan application. The higher your score, the better your chances. Here’s what you can do:
- Pay Bills on Time: This shows lenders that you’re reliable. Pay all your bills, including credit cards and utilities, by their due dates.
- Reduce Your Debt: Lowering your credit card balances and other debts improves your credit usage ratio. Aim to keep your credit card balances below 30% of your credit limit.
- Fix Errors: Get a copy of your credit report and check for any mistakes. If you find errors, dispute them with the credit agency.These can take from one business day to two weeks due to the involvement of a guarantor.
Maintain Stable Employment and Income
Lenders like to see stability. If you have a steady job and consistent income, it reassures them that you can make your loan payments.
- Avoid Job Hopping: Try to stay in your current job until your loan is approved. Frequent job changes can make you seem risky.
- Show Proof of Income: Be ready to provide payslips, tax returns, or bank statements to prove your income.
- Pay Down Debts: Try to reduce your existing debts as much as possible before applying for a new loan.
- Avoid New Debts: Don’t take on new debts just before applying for a loan, as this can lower your credit score.
Manage Your Existing Debts
Lenders will look at your debt-to-income ratio, e.g. the amount of debt you have compared to your income.
Get Pre-Approved
Getting pre-approved for a loan gives you an idea of how much you can borrow and shows sellers that you’re serious.
- Shop Around: Different lenders have different criteria, so getting pre-approved with several can help you find the best terms.
Provide Accurate Information
Always be truthful and thorough on your loan application.
- Double-Check Your Details: Ensure all your information is accurate to avoid delays or rejections.
- Be Honest About Your Situation: Don’t try to hide any financial issues, as lenders can often find this information during their checks.
Take the First Step with Believe Money
Applying for a loan can open up new opportunities. Whether you’re looking to take out a personal loan or need an emergency loan, with Believe Money, the process is straightforward and designed to help you every step of the way.
By understanding what happens after you submit your application and taking proactive steps to improve your chances of approval, you’re well on your way to achieving your financial goals.
Hannah O Neill
Financial ExpertHannah O'Neill is a leading financial expert with over 10 years of experience in credit and loans. She is helping people achieve their financial goals based in the United Kingdom. She has been featured in numerous media outlets. Her articles offer practical advice on how to improve your credit score, get the best possible loan rates, and manage your debt wisely.
Why Use Believe Money?
Believe Money is an award-winning finance broker dedicated to offering the best range of affordable loan options. Whatever your circumstances or credit rating, we’re committed to getting you the best secured loan interest rates by searching our entire panel of secured loan provides.
Whatever you need a secured loan for, we’re here to help. Our specialist advisors are available Monday to Friday, so if you need any help please contact us online or give us a call on 01302 591 360.
We compare loans from our panel of the UK's top lenders to get you the best deal.
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