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Personal Loan Comparison UK: How to apply

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Robert Bester, Consumer Finance Expert

20th September 2021

4 minute read

Compare Personal loans

Comparing personal loans can seem like a minefield if you have never borrowed money before. But with enough information and understanding of how loans work, it can seem a lot clearer and allow you to make a much more informed choice.

Personal loan comparison in the UK looks a little like this:

  1. Choose the right personal loan for you:
    1. Loan amount
    2. Loan term
    3. Interest amount
    4. Lender
  2. Check your personal loan eligibility
  3. Start comparing loan products
  4. Make a firm decision

Following this easy 4-step process could allow you to find the best personal loan for your circumstances and allow you to click ‘apply’ in no time. Before that happens though, take a look at how personal loan comparison works by reading below.

Choose the right loan product for you

The first step to comparing personal loans is understanding how they work in relation to your own personal circumstances. This can help you figure out if getting a personal loan is right for you and subsequently what kind of personal loan will work for you. The most common loan product is an unsecured personal loan, which means it is not secured against a high-value asset, unlike a secured loan.

Once you’re happy with your decision of a personal loan, you will need to make a decision on what kind of loan would work for your circumstances. That means deciding a further three things; loan amount, loan term and Interest amount. Having these three figures in mind will help you compare personal loans more efficiently.

Personal loan amount

When you are thinking of borrowing money it is normally for a significant purchase, which will mean you should have an amount in mind that you would like to apply for. Our available loan amounts are between £1,000 and £35,000. Looking to borrow more? Try a Secured loan instead.

Remember that a personal loan is for spreading the cost of a large purchase, so have that amount in your head as you start to look at loan products. If you have more than one purchase to make, combine these amounts to give you your grand total.

Personal loan term

You will have a choice of whether to pay off your personal loan over a short amount of time or have a bit longer to do so. Our available loan terms are between 1 and 6 years. Looking to pay back over a longer term? Try a Secured loan instead.

In simple terms, the longer your loan term, the less you will pay per month. But since you are choosing to take more time paying off your loan, you will often find you will pay more interest on top. Use this simple explanation below as a general guide:

  • Shorter loan term = More to pay per month, less in interest
  • Longer loan term = Less to pay per month, more in interest

Interest amount

You won’t usually have a choice of interest rate when applying for a personal loan, but getting a low APR personal loan will ensure you pay less in interest and ultimately, save money when borrowing.

Access to lower interest rates can often be based on your credit score and therefore your eligibility, so it’s worth checking your credit report if you plan on applying for a low interest rate personal loan.

When comparing personal loans, it’s always best to aim for the lowest interest rate, so have this in mind when starting your comparison journey.

Lender

While this doesn’t usually factor into whether a personal loan is better or worse than another one, you may already have a preference of which lender you would prefer to borrow money with.

It could be that you have taken out credit products with them before and have had a good experience, or conversely you may have had a poor experience with a lender and would like to avoid them in the future. Either way, this might affect your decision-making process when it comes to comparing personal loans.

Check your personal loan eligibility

When comparing any credit products, including personal loans, it is best to check if you are eligible to apply. This means you can get an idea of how likely you are to be accepted for certain products, based on your personal details.

This is also known as a soft search on your credit profile, as you allow providers to take a cursory glance at you and find out if you reach their criteria for acceptance. Whilst there are many complexities to this process, all you need to know is that the process is free and will not affect your credit score.

This step is key to protecting your existing credit score and it also narrows down your search for a personal loan. Being rejected for a personal loan can often have a negative effect on your credit score, so always check your eligibility first.

Start comparing personal loans

Now that you have checked your eligibility, you should be able to see personal loans that you are eligible for. You may have been given a score out of 10 as to how likely you are to be accepted for a personal loan, or you might even be pre-approved for a personal loan, meaning that you are highly-likely to be accepted.

Make sure you look at the personal loans available and see which one is the closest to your original loan amount, loan term and interest rate. If there aren’t any available loans or you aren’t being offered anything close to what you were searching for, there may have been a reason for it.

For example, a lender will often need to confirm you are employed and have a steady income in order to afford to make repayments. If this isn’t the case, you could find yourself with personal loans that don’t match your criteria.

Make a firm decision

Once you have checked your eligibility and have narrowed down your search, you might find that you have a high-likelihood of being approved or you could even have been pre-approved for a personal loan that matches your circumstances. Hurrah!

Double check that you are happy with the terms of the personal loan and click through to formally apply. Congratulations! You have now applied for a personal loan.

If you are approved, you will be notified by the lender and will have to confirm this acceptance. The lender will then arrange for the amount to be transferred into your nominated account and you will start the monthly repayments immediately.

If you are rejected, then you will be notified by the lender and will unfortunately not be able to proceed. Instead of applying again, always STOP and check your credit score.You may decide that you want to work towards improving your credit score before you apply for another personal loan. Check out this article to find out ways to improve your credit score.

Are you ready to compare personal loans? Head over to our personal loan comparison page using the link below.