The dos and don’ts of applying for a loan


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Thinking of applying for a loan? Whatever you need your loan for, there are a host of features which you could take advantage of depending on the lender. CJ lends an ear to the loans team to find out what you should look out for to ensure you get the loan that's most suitable for you. 

How quickly do you need your loan? 

This is probably the most common question you'll need to answer if you're taking out a loan. Some lenders can take up to 10 working days to fund your loan, if you're approved. Often this is the case where the provider is backed by a bank or building society acting as lender. Your application details will have to be sent to and processed by the lender, and the decision fed back to you via the provider you applied through which can cause some of the delay. By applying directly through a recognised lender, preferably where you can apply online - rather than by phone or on paper - you'll be more likely to have your decision quickly, if not instantly and your funds quicker too.  

Beware the price guaranteed loan 

Sound great does it? Your lender will match any other rate that is better than their own within 30 days of you taking out their loan. The small print may surprise you. It will likely include the requirement that you provide evidence of the competing offer. In other words, you'll have to have also applied for the competing loan - imprinting on your credit file twice; once for the loan that you already have and again for the second loan to qualify for the price match. In the long term, this could impact on your credit record as it could affect future credit searches, as your credit file will show you applying for large amounts of credit in multiple places. 

Headline rates and soft search

All lenders have an advertised rate. 51% of eligible customers who apply must receive that rate but not everyone will. There are different grades of APR depending on the amount you want to borrow and your credit record.  Shopping around is a good way to ensure that you are getting the best deal for you and not just looking at the headline rate. There are different levels of soft search functionality from that you will see on comparison sites, detailing your likelihood of acceptance on a scale of 1-10 or red to green indicators. Some application processes, like TSB's, offer a personalised quote which means that you'll see your options for length and term of borrowing before you apply so your credit record remains unimpacted. These options are a great way of shopping around before you apply. 

Can a fixed loan be flexible?

Yes! While most loans are offered on a fixed term basis: you'll agree to borrow X over Y years at Z% but there can still be flexibility in a fixed term loan. Some lenders offer the option of overpayments on your loan, or to even take a one or two month payment holiday. Mostly you'll need to have made your first payment and be up to date with your payments if you need to take a break later in your loan term. You should bear in mind that the interest on your loan amount will continue to build up over the months of your payment holiday, if you take one but if you think you might need some flexibility, these are great features to look out for. 

With all of this to bear in mind about loans, maybe you've decided that another product is better for you. Our guide to the do's and don'ts of applying for a credit card might be more help.

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    CJ Montague, Deputy Editor

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