As you grow in your career, you need to start expanding your wealth by investing in the right assets. To do this, you need to create liquidity which is only possible by borrowing loans and making profitable investments in the real estate sector, equities, or any other sector. So, if you are wondering how to get your first loan to make those profitable investments, then here’s all you need to know in order to borrow your first loan.
At Money Pig, we have helped hundreds of first-time borrowers with a fair deal by connecting them to the right lender from our network. Our direct lenders are very ethical and patient with first-time borrowers and are always eager to give them a clear picture of their monthly obligation. Most people borrow a loan for the first time either to fund their education or to pay for their personal expenses while pursuing full-time education. However, that is very different from borrowing your first payday loan or business loan. So, in this comprehensive guide, we shall cover up all that you need to know about getting different types of loans for the first time.
FAQs | How to Get My First Loan?
- How to get my first loan while in college?
- What are the eligibility criteria to get a loan?
- What is a credit score?
- How to start building my credit score?
- How much loan should I apply for?
- How to get my first loan?
- What should I know before getting my first personal loan?
- How to get my first car loan?
- How to get my first loan with bad credit?
- How to get my first loan to buy a home?
- How to get my first business loan?
Most people borrow a loan for the first time in order to fund their college education. There are also some who borrow loans to manage their expenses while pursuing full-time education. For those pursuing full-time education, there are very few borrowing options available in the UK. That’s because most banks and lenders do not advance loans to individuals unless they have a full-time job. While that’s the grim reality of the UK’s financial services sector, there are intermediaries such as Money Pig, who help those with part-time and remote employments to obtain financial assistance.
In fact, Money Pig has a financial product called the student loan, exclusively designed for students. The unique thing about this loan is that the borrower can use it for any purpose he or she deems fit. So, this helps students pay for unforeseen expenses such as repairs, emergencies, and more. Some even choose to borrow it to buy a car or for travel. On the whole, this type of loan helps them meet their personal expenses. You can apply for a student loan from Money Pig’s lenders by submitting an online application on our website. Our student loans are only available to UK citizens who are pursuing full-time education in the UK.
You can get a loan in the UK if you are a UK citizen and have completed 18 years of age. Also, it is essential that you are fully capable of entering into a legally binding contract. Also, you must have a steady source of income to repay the amount of loan you wish to borrow. It is essential that you borrow only as much as you can repay comfortably. Once those mandatory criteria are fulfilled, then the lender would evaluate your eligibility for the loan amount you wish to borrow. In most cases, lenders would advance loans only to those with a full-time income. However, if you are in any other type of employment, you can apply for a loan from Money Pig’s direct lenders. At Money Pig, we have a wide network of lenders willing to offer loans without very strict eligibility criteria. We believe in offering a loan to anyone who can repay what they intend to borrow.
A credit score is a rating given to an individual based on that individual’s previous financial actions. Every time a loan is borrowed, promptly repaid, defaulted, etc… the lender reports the same to the credit agencies. These credit agencies record your credit score which can then be accessed by potential lenders in the future to check your credibility when it comes to repaying the loan. SO, even if you are getting your first loan, it is essential to only borrow as much as you need and can repay. In the UK, the Financial Conduct Authority (FCA) has made it compulsory for all direct lenders to run a credit check before lending a loan. This is done to uphold the integrity of the UK’s financial sector and to minimize potential disputes and losses. So, if you do not repay your loans on time then it could have a lasting impact on your future borrowings.
Your credit score reflects how you have managed your previous debts and how much money you currently owe to other lenders. This data gives the lenders a clear picture of your financial credibility, based on which you may or may not qualify for certain perks. For instance, most premier banks in the UK refuse to sanction loans to those with low credit scores in order to minimize potential defaults. Also, most lenders offer low APRs to those with good credit scores. They do this because persons with good credit scores are considered to be more credible when it comes to repayments. Overall, your credit score is used by lenders to determine whether or not to transact with you. Also, it enables them to figure out how much loan to advance and at what interest rates. Usually, those with low credit scores end up paying high-interest rates.
If you are getting your first loan, then it is quite evident that you do not have a credit history and must, therefore, start building one. You can start by ensuring that your name is on the electoral roll and that your address is updated. Most people do not realize that forgetting to update their address could have a negative impact on their credit scores.
Next, sign up for a UK bank account and manage your finances carefully and cautiously to build your credit history. You can do this even while you are still pursuing your studies, but remember that although most banks may offer you small overdrafts, you still need to repay that promptly. Else, it could have a negative impact on your credit score. Use the bank account you have created to make small deposits or to receive your paychecks for your part-time job or summer job. This helps you establish an ongoing relationship with the bank. If you use your bank account to make auto-debits towards subscriptions or bills, then make it a point to keep sufficient money in your bank account. Always make it a point to avoid missing out on your payments. These are some simple things you can do to start building your credit score.
When you apply for your first loan, the biggest question usually is how much loan you should apply for. Since it is your first loan and there are no other previous liabilities involved, you can borrow a loan that can be repaid with up to forty percent of your monthly income. You can adjust this by extending or reducing the loan tenure. However, you ought to know that lenders tend to offer lower APRs to those who borrow a loan for a longer duration and higher to those who wish to borrow one for a shorter period. Nevertheless, it is always recommended that you only borrow as much as you need and repay it to the earliest.
We say this because with time, your borrowing costs increase and that’s why it is always recommended that you repay early. Let us now understand that by comparing two scenarios. In the first scenario, Jack borrows a loan of £50,000 for a period of five years and is offered an APR of 20 percent. So, Jack pays £1,324.69 per month for five years, which makes his total borrowing costs £29,481.65. So, Jack repays a total of £79,481.65.
In the second scenario, Jill borrows the same amount, which is £50,000, but for a period of 2 years and is offered a higher APR of 30 percent. So, Jill makes monthly payments of £2,795.64 for a period of two years. Now one may assume that Jill made a bad deal, but the fact is that she would end up paying much lesser than Jack despite the higher APR. That’s because she would clear her loan within 2 years and so her total repayment would be £67,095.38, which is much lesser compared to Jack’s. So, never borrow a loan for a longer period just because you are being offered lower APRs. Instead, make decisions based on your own needs and affordability.
Getting your first loan requires you to do some in-depth research and apply to the most appropriate lender. It is worth mentioning that applying to too many lenders can lower your credit score as lenders perform hard credit checks before advancing the loan. However, at Money Pig, we limit that because as a financial intermediary, we are capable of dictating customer-friendly measures to our network of lenders. One of them is to limit the number of hard checks performed on our customers and to achieve this we run the initial soft credit check which has absolutely no impact on your credit score. Our lenders perform hard credit check only when you and the lender agree to each other’s terms and conditions. So, the hard credit check is performed just before the funds are released.
If this is the first time you are applying for a loan then it is evident that you are unaware of this and several other aspects of borrowing. So, instead of making borrowing mistakes, we recommend that you submit a loan application on Money Pig’s website. Money Pig is a financial intermediary that accepts and processes loan applications for free. So, even if you are a first-time borrower, you can submit your application to us and our Experts would forward it to the most appropriate direct lender. This eliminates the need for you to contact various lenders to check if they lend money to first-time borrowers. Also, you don’t have to pay any loan application or approval fees to us.
Personal loans are extremely popular because they come without any restrictions on how the borrower utilizes the funds. In fact, most lenders do not even bother to ask you the reason for which you intend to borrow the loan. Usually, it is only your credit score and repayment capacity that is evaluated by the lenders.
Since personal loans are so popular, lenders compete against each other to offer the best deals to potential borrowers. Now, this is something that you can take advantage of. So, do not limit your options only to your bank. Instead, look for other profitable borrowing options from legal and reputed lenders. You don’t have to spend hours finding them and then applying for a loan individually from those lenders. Instead, put in a single personal loan application to Money Pig and we will do the rest for you. You can then sit back and choose the best offer and pick the most profitable deal.
However, do not choose a loan option solely based on the interest rates. Instead, look at the repayment conditions and ensure that they are flexible. With so many people unemployed due to the coronavirus outbreak, the UK government has intervened and requested lenders to grant payment holidays for three months. However, this does not happen all the time and if you lose your job before repaying the loan, then you sure need some time to arrange funds. Flexible repayment options give you enough time to do that, without lowering your credit score.
It is always exciting to buy your first car, and while you are all pepped-up about your decision to buy one, there’s something else you need to focus on — car financing. There are many car financing options available in the UK such as hire purchase, personal contract purchase, and of course borrowing a loan. With so many options available, it is not uncommon for a person to get confused about which one to choose.
Most first-time car owners make the mistake of choosing the wrong financing option such as hire purchase and personal contract purchase, due to which they end up paying more. So, the best way to finance your car is by borrowing a loan. You can borrow two types of loans to buy a car — a car loan and a personal loan. However, most people choose a personal loan because it allows them to own the car right from the beginning. It is always recommended that you fund a part of it from your savings and use the loan amount to fund the rest. This helps minimize the amount you pay as interest and also makes it easier to manage your finances.
Money Pig offers several car loans and if you need one then we can process it right away. Besides car loans, we also offer personal loans and student loans that can be used to buy cars. To apply for any of these loans, fill and submit the online loan application available on our website. Our process is beginner-friendly and even if this is your first car loan application, you won’t have any trouble applying for one.
Credit ratings are a big deal when you apply for a loan in the UK because it is the yardstick that lenders use to measure your credibility when you apply for a loan. Most lenders refuse to advance loans to those with poor credit scores or charge very high-interest rates. Also, there are some who claim to offer loans without a credit check and dupe potential borrowers by trapping them financially into unfair arrangements. These loan sharks have always been around in the UK’s financial services industry and must be avoided at all costs. Although they may advance the money, their debt collection practices are questionable and often illegal. So, regardless of your credit score, make it a point to stick to borrowing loans from FCA licensed legitimate lenders in the UK.
At Money Pig, we can connect you to a whole bunch of direct lenders who advance loans to those having poor credit scores and that too at competitive interest rates. This not only helps you get a fair deal but also gives you an opportunity to build your credit score by promptly repaying the loan. Since these loans are designed for those with poor credit scores, you need not worry about the credit check. Unless you have committed some serious fraud or defaults, you should be able to get a bad credit loan from our lenders. So, go ahead and submit your bad credit loan application on our website and we will get back to you with the most exciting offers.
Buying a home is a very big decision, and for many, it is a once in a lifetime decision. So, if you have decided to buy a home then you need to start by evaluating your affordability. If you cannot afford to buy one on your own then you could ask your partner or spouse to jointly apply for the loan. However, do this only if you are sure that your partner or spouse does not have any problems with their credit history. Those who are buying a home for the first time must also check for government benefits because the UK Government encourages first time home buyers in many ways. You can check for the existing schemes and also the properties that are eligible under that scheme.
Next, you need to find a lender willing to advance the loan to you and apply for one. In most cases, the lender would ask you to deposit somewhere between five to fifteen percent of the asset value as a deposit. So, once you are confident that you can make the deposit, then it’s time to apply for a mortgage. You would then be directed to talk to a mortgage specialist, following which the mortgage agreement would be sent over for your signature. In most cases, you would have to make in-person visits due to the size of the transaction. Once the formalities have been completed and you have determined the date when you intend to complete the purchase, the amount would be sent to your solicitor.
In most cases, new businesses will not qualify for a loan, but if you have been running your business for some time now and wish to borrow a loan then it might be possible. You must begin by looking for lenders who advance business loans. Before approaching them, you must prepare yourself for their first question — why do you want to borrow a business loan. You may want to borrow the loan in order to start a new business, expand your existing business into a new vertical, to create liquidity, or to pay for operational costs. In most cases, startups may not qualify for a business loan. Finally, submit your application to the lender and wait for the funds to arrive. A word of caution! Do not apply for a business loan from a bank unless you can provide security and are earning high profits. Banks tend to take a very traditional approach when it comes to approving business loans.
Money Pig’s network of lenders offer all types of loans at low-interest rates. To get the best deal, Apply Now.