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You are not alone if the coronavirus pandemic has left your finances a mess. Whether you have found yourself temporarily out of work as a result of the pandemic, living on a reduced furlough income, or you are out of work completely, you’re among thousands of people in the UK who are suffering financially during the crisis.
Applying for a personal loan to get you through these times can be ideal if you have work lined up for the future and know that you are going to be able to make repayments. We’ve put together some top tips to help you successfully apply.
Assess your Financial Situation
Going over your financial situation right now might not be the most pleasant experience, but it’s a must if you want to apply for a personal loan.
The last thing that you want to do is apply for a loan and then realise you are going to struggle to make repayments and end up in even more financial trouble.
Consider how much money you have coming in, what your expenses are, and how much you have leftover that can comfortably go towards repaying the loan.
Check Your Credit Rating
Once you have determined how much you can comfortably borrow, check your credit rating to ensure that your score is going to be good enough to get accepted. You can use several free tools to see what lenders see when they run a credit check on you to determine how high your loan acceptance rates are going to be.
If your credit score is low and you are not sure why, check your credit report for any mistakes that could be bringing it down; you can apply to have these corrected.
Use Eligibility Checkers
Eligibility checking tools are a must when applying for a personal loan since they can help to give you a better idea of what you are likely to be accepted for, without leaving a mark on your credit rating.
You can also use a loan broker like New Horizons to see your eligibility for short term loans and increase your chance of loan acceptance. Read these tips on getting a loan accepted from New Horizons, a UK broker that can help you find the most suitable loan options for you by searching from a panel of different lenders.
Don’t Reapply Immediately
If you apply for a loan and are rejected, the worst thing that you can do is go and apply with another lender or for a smaller amount five minutes later. This is because when you are rejected for credit, it leaves a mark on your credit rating that lasts for around 2-3 weeks.
Lenders can see that you’ve just been rejected for a loan when you make a new application, which can often leave you getting rejected for further loans, which might have been accepted otherwise. Instead, after a rejection, leave it three weeks just to be safe before trying again. Eligibility checkers can help you solve this problem.
Calculate how much money you are going to need from a personal loan and focus on applying for this amount. It can be tempting to take a larger loan offer if you are eligible for it, but bear in mind that this will mean more interest to pay and larger monthly repayments.
Instead, stick to applying for loan amounts that are just the right amount of money to cover your personal expenses until you are earning money as normal again.
Consider the First Repayments
If you are out of work during the crisis and will be relying on the personal loan to pay your expenses until you are able to go back to work, consider how you are going to make the first few repayments if they are due before you are able to start working again.
You might want to apply for Universal Credit or another benefit that you are eligible for, in order to help you with living expenses and making any repayments to the loan. Another option is to keep some money aside from the loan itself to make repayments for the first three months or so, which will give you additional peace of mind.
Take Your Time
Finally, remember that borrowing a personal loan is a commitment, so it’s important to take your time and make sure that it’s the right option for you before you apply. Don’t apply for a loan if you are not sure if you can make the repayments or if making repayments will cause you to be short on your priority bills, such as rent, council tax, and utilities.
A personal loan can be a great help if you are struggling financially during the current crisis. Keep these tips in mind before you apply to ensure that you are accepted for a loan that is suitable for you.