Applying for a loan for the first time can be a daunting experience. However, once you understand what each stage of the loan application process requires, it’s relatively simple.
Getting a loan will differ from lender to lender, but typically it includes submitting a range of personal details and completing a standard application form. Your credit score and current financial situation is then used to determine your eligibility for a loan.
Discover how loan applications work and what you need to apply for one with our expert guide.
What information do you need to apply for a loan?
Before you start the application process, there are a few personal details you’ll need to have to hand. These include:
- Bank details
- Your current and previous addresses
- Current employment details
- Personal identification, such as a passport or birth certificate
How does the loan application process work?
A lender will typically request information on a potential borrower’s financial situation, so it can assess their ability to repay any agreed loan amount.
Providing you supply the necessary personal documents and information on time, processing a loan can be quite quick – giving you access to the funds you want in good time.
There are several stages involved in processing a loan:
1. Research & Requirements
Before you apply for your loan, it’s worth doing a little research into the specifics to decide which type of loan will best suit your financial situation and whether or not you can afford to borrow without putting yourself in financial difficulty.
- Check your credit score - Rejections for credit are recorded in your history and can lower your credit score, which can make it even more difficult to get approval in the future.
- Consider the repayments - Think about whether you’ll be able to afford the repayments on a loan, should you be approved. Our online loan calculator tool will give you an idea of the amount you’ll likely be paying back on any loan agreement.
- Have your financial information ready - Lenders will request a variety of personal documentation and information as part of your loan application, ranging from your address history to your current employment. Making sure you have all of this to hand when you are looking to apply can help speed up the process.
2. How to apply for a loan
There are many ways to apply, including over the phone or by post, although applying at a bank or online tend to be the quickest and easiest ways.
Most will involve completing an application form, either online or on paper. After you’ve submitted this, along with any other documentation requested, the lender will run a credit check on your financial history to assess your ability to meet the repayments.
Every lender will analyse a variety of factors when considering your eligibility for a loan. This can include:
- Credit Score
- Proof of residence
- Proof of income
- Proof of eligibility (age)
- Financial history (existing or previous credit, CCJs etc)
- Personal history
Once the lender has gathered all the appropriate information, they’ll be able to give you a decision on whether your loan application has been a success. The lender may also contact you at this stage to discuss your application further.
4. Approval & Acceptance
Once all the checks have been completed, the lender will be in touch to let you know whether you’ve been successful. They can offer you your requested amount, revise their offer, or refuse your application.
How long does a loan application take?
The duration of the loan application process can differ between lenders and the type of loan you’ve applied for. However, the entire process, from filling in your forms to successfully receiving your funds, can take from a few days to a few weeks, depending on the type of loan you’ve applied for.
It’s worth noting a stronger credit score might also mean a faster application process. Those with a poor score are likely to be contacted by the lender first to discuss their financial situation, which will likely lengthen the application process.
What is a loan application form?
A loan application form can be completed online or as a paper copy. You’ll usually submit this alongside the necessary personal documents, such as a passport and your address history. Application forms differ between lenders, but typically don’t take more than 30 minutes to complete.
What happens after I’ve been approved/rejected?
If you’ve been approved for a loan application, you’ll be contacted by the lender with further details regarding how much they’re willing to offer you and an agreed repayment structure. Along with this, there will be the terms and conditions of the loan arrangement. It’s important that you read these in detail and familiarise yourself with how and when you’ll pay back the borrowed amount.
Once you’re happy and have come to an agreement with the lender, you’ll have the money transferred into your bank account. Most lenders will begin this process instantly, though some will specify a pay date as part of your arrangement.
Tips for making your loan application a success
- Make sure all details on your application are accurate – check and double check your details to make sure everything is accurate, to lower the chances of being rejected for a loan.
- Build and improve your credit history – things like making sure you pay bills on time and are on the electoral roll can help to improve your credit rating.
- Check your credit report – check your credit report yourself to make sure there aren’t any errors on there.
- Don’t apply too often – repeatedly applying for loans can leave a mark on your credit score. Only apply if you feel you have a chance of success.
If your application has been rejected, it’s best to find out why before applying again. An unsuccessful application could be for several reasons and is not always determined by your financial situation. Explore more on refused applications in our Know How guides.
Applying for a loan can be a simple and easy process, provided you submit all the required paperwork and additional information on time. A broker like Norton Finance can help guide you through the process and advise on which loan best suits your financial situation.
Discover more information on the range of loans offered by Norton Finance.