United Kingdom By Team Consumer, 31 Mai 2022

Finding the personal loan in England that’s right for you

Looking for the best personal loan? Want to see which providers have the offers that suit your budget? Need some tips on what to watch out for? Check out our guide to the top personal loan providers on the market and see which one fits your needs.

What are the main features of a personal loan?

Before you start shopping around for a personal loan in England, you should get to know the key terms used by loan providers.

  • If you are borrowing for yourself or your family, you’ll be looking for an unsecured personal loan. It’s unsecured because you do not need to offer your home, business, or other assets as security.
  • The interest rate is the percentage of the loan the lender adds to your repayment.
  • The APR is the annual percentage rate: the overall cost of borrowing per year.
  • The repayment term is the length of time you take to pay back your loan.
  • The total repayable cost is the amount of money you will pay back.
  • Adding payment protection insurance will help you out if something goes wrong while you are repaying your loan.

Most aspects of the loan will be decided by the lender. They will let you know their terms once you have told them the amount you want to borrow, and your preferable repayment term.

Pay special attention to the total repayable cost of your loan. This will give you a very clear idea of how much a loan will cost - whatever features your lender supplies.

Payment protection insurance (PPI) can be very expensive. Most people will not benefit from PPI.

Who offers personal loans in England?

In England and the UK, many different types of businesses will be willing to lend you money. They include:

  • High street banks, like HSBC;
  • Supermarket banks, such as Asda;
  • Credit unions in your local area;
  • Companies specialising in personal loans, Novuna for example;
  • The post office;
  • Pay-day loans companies - Mr Lender is one major provider.

There are so many companies offering personal loans, it will be impossible for you to look into every option. But do try to investigate at least one company from each category.

Most lenders offer similar services. However, they all have different options about repayment periods, interest rates, and the amount you can borrow. So, not every lender will be able to fulfil your needs.

Out of the all available options, the only category to beware of is pay-day loans companies. These businesses make it easy to borrow small amounts of money with extremely high interest rates. People who take out a pay-day loan often end up making their financial situation much worse.

What do you have to do when you apply for a personal loan in England?

Lenders usually make it easy to find out about their personal loan terms. They usually provide a quick service to figure out if their services are right for you.

Applying for the loan takes a bit more work from you - the lender needs detailed information to decide whether or not they will lend you the money.

A typical process would go like this:

  • Visit the lender’s website. Most lenders include a loan calculator to show you exactly how much you will repay - use this to see if their services meet your needs.
  • Check that you meet the basic requirements for borrowing money from that company. Their websites might mention details about your age, your annual income, and your bank account status.
  • If you meet the basic requirements, you’ll need to input some detailed information to obtain a quote for your loan. You will need to formally state the amount you want to borrow and the repayment period you’d like. It’s likely that you will also need to provide some personal details - such as the purpose of the loan, your marital status, any dependents, and your address (or addresses) for the past 5 years. Some lenders will also require detailed information about earnings.
  • The lender will then provide a quote to you - giving you a formal statement of the costs you will pay.
  • Finally, you will then have the opportunity to apply for the loan.
  • When you make an application, the may still not lend the money to you! Your application could be rejected if you have a bad credit history (among other reasons). If you do get rejected, you can ask the lender why.

As you can see, the process of applying for a loan may be quite drawn out. Anyone trying to save money should be glad about this - it will give you the chance to consider whether you need a loan at all. And if the lender thinks you won’t be able to repay your loan, they won’t lend to you.

What documentation will I need when I apply for a loan in England?

When a lender thinks they may lend you a loan, providing relevant documents is surprisingly easy.

Documentation will vary depending on who you are. For permanent British citizens, a lender will usually look at your background using a service like Experian. They will be able to get to know your background from just a few basic details.

In some cases, you can receive your loan very quickly. The application process may be even easier if you use a bank that you already work with.

If you haven’t lived in the UK for long, it’s more likely you will need to provide some paperwork, including:

  • Proof of address, such as a recent utility bills;
  • Photo ID, such as a passport or drivers’ license;
  • Proof of earnings, through bank statements or payslips.

The lender will want to be certain about your background. Your loan will take longer to process if it’s difficult to find this information.

Which personal loan provider is right for you?

It’s impossible to say that one company is the ‘best’ loan provider for everyone. An excellent loan company for one person may not provide the specific service someone else needs.

So, with personal loans, you can’t just count on personal recommendations: you must check very carefully whether the terms of a loan are right for you. The more research you can do, the better.

For my own needs at the time of writing, I would be most happy to go to the Post Office. This is because:

  • They offer loans of the value I require;
  • They accept a repayment term that is appropriate to my needs;
  • The APR rates make the loan more affordable;
  • The Post Office usually has good customer service;
  • The application process is clear and simple.

If you’re looking for a loan in the UK, make sure you include the Post Office when you search for the best rates for you. They are a reliable company that you can usefully compare with the other available options.