Most lenders offer instant decisions on loans, but this doesn’t necessarily mean they’ll send you the funds on the same day.
Whether you’re able to get an instant decision on a loan usually depends on the lender and what type of loan you’re looking for.
Finding a lender
To help you find the best lender to suit your financial needs, you could use a credit broker. A credit broker will help you find the right loan for you and your circumstances. Alternatively, you could use a comparison site to see what deals are on the market right now.
Types of loan
A personal loan is an amount of money you borrow from a lender, which you repay through fixed-amount instalments over a set amount of time.
If you were to get a mortgage, you could only spend this on buying a house. If you were to get a car finance loan, you could only spend this money on a car. With a personal loan, you’re able to spend it on whatever you choose.
Personal loans are often used to make large purchases or consolidate debts, as it typically works out as a cheaper option than a credit card. This is because credit cards tend to have a higher interest rate than personal loans.
Personal loans are usually called unsecured loans, which means you wouldn’t need to secure them against any assets you own.
A secured loan means the money you borrow is 'secured' against an asset you own, such as a house or a car. These assets would be used as payment to the lender if you couldn't pay back your loan.
It can be easier to get a secured loan because putting down collateral means it's less risky for the lender. These types of loans usually offer lower interest rates than unsecured loans, as well as the option to borrow a larger amount.
The application process
Each lender will have a different application process, but the easiest way to do it is usually online. Filling out an online application means you won’t have to spend as much time waiting in call queues or writing out emails.
However, once you’ve completed the online application form, you might have to speak to the lender on the phone to complete the process.
Getting a decision on your application
Depending on what type of loan you’ve applied for, if you haven’t received an instant decision, don’t immediately apply for another with another company - this could harm your credit score.
If you apply for multiple loans in a short space of time, it can make you look desperate to lenders, which could discourage them from approving your application.
After you get your decision
Lenders consider many factors when deciding whether to approve your loan, such as your:
- credit history
- employment status
- annual income
- how long you’ve lived at your current address.
If your application gets rejected, it could be to do with one of the things listed above.
You can get check your credit report for free with CredAbility.
If your application is successful, you might receive your funds the same day. However, the circumstances vary from lender to lender, so you might need to wait a short amount of time before your funds become available.
Top tips on managing a loan
- Before getting a loan, you should always consider whether it’s necessary and whether you have any other options, such as borrowing from friends or family first
- don’t borrow more money than you can afford to pay back
- shop around for the best interest rates
- use eligibility checkers before you apply
- always make your repayments on time
- if you can afford to pay more than the minimum repayments and your lender allows it, you should consider doing so, as you might be able to pay off your loan quicker.
To find out what a bridging loan is, read on here.
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