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How to get a loan
Last updated 14 May 2026
If you need a loan but aren’t sure where to start, you’re not alone. Whether it’s for unexpected expenses or a major purchase, understanding exactly what’s involved is key to making the right choice.
This guide explains how to get a loan step by step. We’ll cover the full loan process, including typical timelines, the specific documents needed for a loan and essential tips for applying.
When you might need a loan
You might take out a loan for many different reasons, usually to spread the cost of a significant expense over a manageable period. While everyone’s situation is different, these are some of the most common reasons people get a loan:
- Home improvements: Whether it's fitting a new kitchen, converting a loft, or landscaping the garden, a home improvement loan can help fund renovations that potentially increase your property's value.
- Unexpected expenses: Life is unpredictable. If your car breaks down, your boiler fails in winter, or you face a sudden vet bill, a loan can provide the immediate funds to handle the crisis.
- Large planned purchases: Sometimes savings alone aren't enough for major life events. People often apply for a loan to cover the costs of a wedding or a new car.
- Debt consolidation: Combine multiple debts into a single, easier-to-manage monthly payment using a debt consolidation loan.
Types of loans you can get
If you need a loan, the first step is understanding your options. Not all loans work the same way, and choosing the right one is vital before taking a loan out. Here are a few loan options available:
Secured loans
A secured loan is backed by an asset you own, such as your home or car. Because lenders have this security, these loans usually come with lower interest rates and allow you to borrow larger amounts over longer terms.
Unsecured loans
An unsecured loan doesn’t require any collateral. Instead, approval is often based on your financial circumstances, such as your credit history and income. Want to learn more? Read our guide on secured vs unsecured loans.
How personal loans work
A personal loan is the most common type of unsecured borrowing. They provide a lump-sum upfront payment with fixed monthly repayments, a set interest rate, and a fixed term, usually between one and seven years.
Should you apply for a loan?
Before you apply for a loan, there are a few useful things to think about. These can help you in determining how much to borrow and whether a personal loan is right for you.
1. What can you afford to borrow?
Focus on the monthly repayments rather than the total amount. Make sure the repayments fit comfortably within your budget and would remain affordable if your circumstances changed. Borrowing within your means can help keep costs manageable over the life of the loan.
2. How might it affect your credit score?
Applying for a loan involves a credit check, which is a typical part of the loan process. One application is unlikely to have much impact, but making several applications close together can affect your credit score. Checking your credit report before you apply can help you understand your position.
3. Are there other ways to borrow?
There are different types of borrowing, including credit cards for smaller or short-term spending, and overdrafts for temporary cash flow. Each comes with different costs and repayment terms.
4. Compare loans
Interest rates, fees and repayment terms can vary between lenders. Comparing loans helps you understand the full cost of borrowing and choose a loan that fits your budget and needs before you apply.
Personal loans vs other borrowing options
| Borrowing option | Interest rates | Repayments | Best for | Things to watch |
|---|---|---|---|---|
| Personal loan | Usually fixed | Fixed monthly payments | Planned spending, spreading costs, debt consolidation | Early repayment fees, rates may vary by lender |
| Credit card | Variable, often high | Typically, monthly payments that vary | Short-term spending | Interest calculated daily, minimum repayments extend the debt duration |
| Overdraft | Variable, often high | Flexible but ongoing | Very short-term spending | Repayable on demand, danger of relying on it permanently |
The loan application process
Getting a loan usually follows a few clear steps. Understanding the process can help avoid delays when you apply for a loan.
1. Assess your needs
Start by deciding how much you need to borrow and what you'll use the loan for.
Think about:
- The amount you need
- How long you want to repay it over
- What monthly repayments feel affordable
2. Check you're eligible
Before applying for a loan, it's a good idea to check the eligibility criteria.
Lenders usually look at:
- Your age and residency
- Your credit history
- Your income and employment status
Tip: Some lenders offer eligibility checkers that let you see your approval odds without affecting your credit score.
3. Compare loan options
Loan terms can vary between lenders. This step can make a real difference to the overall cost of borrowing, especially over longer terms.
Comparing loans helps you look at:
- Interest rates and representative APR
- Repayment terms
- Fees and early repayment terms
4. How to apply for a loan
If you're ready to apply, you'll usually need to provide personal details, income information, and, in some cases, supporting documents. Many lenders offer a quick online application process, allowing you to upload documents directly and get a decision faster.
5. After you apply
When you apply, the lender will complete a credit check. The lender will then review your credit history and financial situation to confirm your eligibility. If you apply online, you'll often get a decision in minutes.
If successful, you'll receive a loan agreement detailing your terms. Once accepted, transfers are often completed within two working days.
What do I need to take out a loan?
Let's take a look at the information you'll need to provide when applying for a loan.
Personal information you need to provide often includes:
- Full name and address
- Date of birth
- UK residency status
Financial details typically required:
- Employment status
- Monthly income and expenses
- Existing financial commitments
If documents are requested, you might need to provide:
- Proof of identity (passport or driving licence)
- Proof of address (utility bill or bank statement)
- Proof of income and bank account details
Common mistakes to avoid when taking out a loan
1. Borrowing more than needed
It can be tempting to borrow a little extra "just in case," but you'll pay interest on the entire amount. Borrowing only what is strictly necessary keeps the total cost of the loan as low as possible.
2. Focusing only on monthly payments
A lower monthly payment often comes from extending the loan over a longer period. While this helps cash flow in the short term, it typically increases the total interest you pay over time. It’s important to look at the total amount repayable rather than just the monthly figure.
3. Applying without comparing options
Interest rates and terms vary significantly between providers. Failing to compare different loans could mean you miss out on a lower APR or features that better suit your needs, such as flexibility with early repayment.
4. Making multiple applications in a short time
Each loan application leaves a footprint on your credit file. Making several applications in quick succession can suggest to lenders that you’re in financial difficulty, which may temporarily harm your credit score and reduce your chances of approval.
How The AA could help
Whether you're planning a home improvement, looking to consolidate debt or simply wanting to spread the cost of an expense, an AA personal loan could help. You can apply for an unsecured personal loan with The AA and NatWest Boxed if you:
- Are aged 18 or over
- Are a UK resident with a UK address
- Haven't been declared bankrupt in the last 6 years
- Haven't applied for a loan with The AA or NatWest in the last 28 days
Try our loan calculator and get a personalised quote online.
FAQs
Is getting a loan a good idea?
Getting a loan could be a good idea if it helps you cover an important expense. The key is making sure you can comfortably afford the repayments and that the loan terms fit your financial circumstances. Before deciding if getting a loan is right for you, review your income, monthly outgoings, and compare interest rates from multiple lenders. Taking these steps helps ensure you borrow responsibly and only take on debt you can manage.
How can I improve my chances of getting a loan?
To improve your chances of getting a loan, start by checking your credit report and fixing any errors. Ensuring you’re registered on the electoral roll is also a quick way to boost your score. Lenders use your history to decide if you qualify, so paying down existing debt and making on-time payments can make a big difference.
If you need a loan but have a lower credit score, consider applying for a joint loan or a guarantor loan, or choosing a smaller amount to increase approval odds. Make sure you have the required documents for a loan, such as proof of income and bank statements, before you apply. A complete application significantly speeds up the loan process.
Finally, compare lenders to find flexible terms, especially if you’re figuring out how to get a personal loan for the first time. The more prepared you are, the better your chances of approval.
Can I get a loan with a bad credit score?
Yes, it’s possible to get a loan with a bad credit score, but your options may be more limited and expensive. Some lenders specialise in bad-credit loans, or offer secured loans that require collateral (such as your car or home).
If you need a loan and your credit isn’t strong, expect higher interest rates. Improving your credit score, applying with a guarantor, or choosing a smaller amount can improve your chances. Always compare lenders and fully understand the loan process and repayment terms before taking out a loan.
What happens if I’m unable to repay my loan?
If you’re unable to repay your loan, missed payments can lead to late fees, higher interest costs, and damage to your credit score. It could also result in the loss of collateral for secured loans.
If you need a loan but worry about repayment, borrow strictly what you can afford. If financial trouble arises, contact your lender immediately. They’re required to help you explore options like payment holidays.
If you have financial worries, consider consulting a debt expert for advice. Many organisations offer free support to help you create a plan to get your finances back on track.
We’ve listed some trusted organisations below:
What can I do if my loan application gets rejected?
If your loan application is rejected, start by asking the lender why. Common reasons include a low credit score, failing affordability checks or errors in the loan documents.
Fixing errors on your credit report and paying down debt can improve your odds. You could also consider applying with a guarantor or looking into secured loans. Crucially, wait before you apply for another loan. Making multiple applications in a short period could hurt your credit score.
Can I pay off my loan early?
Yes, you generally have the right to pay off your loan early, which can save you money on interest. However, many lenders charge an Early Settlement fee. Always check penalty fees and other specific terms before you take out a loan, so there are no surprises later.