Looking to get a small loan then ensure you do the below eight
steps before applying for one.
1. Check your credit
report and score
An adverse credit score will make it harder for you to get a
small loan. If your credit score is weak, then take steps to improve it before
applying for a small loan, as lenders consider your previous repayment history
when assessing you.
You may find you will be able to obtain a small loan with
your current credit score, yet the interest rate may be higher.
2. Consider both
online and offline lenders
People typically head to the high street banks to obtain a
loan; however, banks offer little, so borrowers are turning more and more to
online lenders that are not only more flexible, yet quicker in depositing the
loan in a borrower’s bank account.
3. Compare the cost
of the small loan
Borrowers should always shop around when comparing
loan interest rates and repayment terms – what is the representative
APR? What will my monthly payments be? What happens if I default on paying? How
much additional interest and fees will I have to pay? Some financial
institutions may provide you with a small unsecured loan whilst a local bank
may offer more competitive interest rates.
Apart from comparing small loan interest rates, check what
other charges you may have to pay – several financial lenders charge fees for
processing the loan and an early repayment fee.
4. Check your
Banks and financial lenders require you to meet several
criteria to be eligible to take a loan. Most will want the following:
- At least 18 years old
- Be a UK resident
- Receive a regular income
- UK bank account with an active debit card
- Have a mobile phone (to verify who you are account)
Be mindful that some lenders only lend to those who are
employed, some may consider self-employed and receiving benefits.
5. Acquire the
Before applying for a loan, whether through a bank or an
online lender, ensure you have all the proper documentation required for
applying for the loan. Documentation could include recent payslips, benefit
letters, letter of employment, utility bills to confirm current address and any
6. Select the
Pick a lender who provides a flexible repayment schedule and
various options to repay the small loan. One way to do this is to use a small loan calculator on the lenders’ website
and a budget calculator to ensure that you can afford the repayments each
7. Read the small
loan terms and conditions
It is imperative that read and entirely understand all the loans
terms and conditions. If you do not understand anything at all and have a
query, then make sure you contact the lender right away and find out.
Once you have completed the steps mentioned above, you can
begin to apply for the small loan – either online or through than appointment
with the financial institution you have selected.
8. Applying online
When applying online, ensure that you complete all parts of
the application form and upload any required documents to support your
application. Importantly you will need to mention the desired loan amount you
wish to borrow (the final offered amount may be different from what you
initially applied for), your contact details including email address and phone
number, and your intended repayment plan.
This is the stage when all the documentation must be
verified. The financial lender, whether in a bank or online, will check whether
you are eligible for the small loan or not. Once all the documents are
verified, they will either write to you with a decision or if applied online,
will get almost instant approval and money in your bank within minutes.
Getting a small loan has become a straightforward process. Prospective borrowers can now apply for a small loan and have that loan amount in their bank account in no time at all if they apply online.
About the author
David Bailey-Lauring is a single father of three boys so he knows what
it takes to stretch a budget when it comes to family finances! David is a small
business entrepreneur and regularly writes about entrepreneurship, tech, sports
and personal finance in the UK, USA, and Europe.