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When assessing your ability to make the repayments on a loan; the company will ask you details about your employment, income, existing commitments, bank account, address and will also perform a credit check to determine how likely you are to be able to repay your loan.

They do this by contacting credit reference agencies that hold information such as whether you have missed any bill payments, made any late payments or had any County Court Judgments registered against you. You can check your credit report with Experian.

There are a variety of different places to get loans from, including:

• secured loan providers
• high-street banks and building societies
• internet loan providers
• online comparison sites
• supermarkets and high-street stores

You just need to find the loan provider that provides the best deal for you and your circumstances.

There is a wide range of loans to consider. To find the right loan for you, you need to get a good idea of what is available and if you are eligible:

• Personal loans. Personal loansare sometimes called unsecured loans. This means the amount you are borrowing is based on your personal credit rating. The maximum amount available is usually £25,000 and the longest time you would be able to repay the money over is 10 years.
• Secured loans. This is when you use your property as security for the loan. This means that if you are unable to make the monthly repayments you could lose your home. You can borrow larger amounts, typically up to £250,000 and the longest time you would able to pay the money back is usually 25 years.
• Debt consolidation loans. Debt consolidation loans. This is where you repay all your debts with one loan. For example, if you had some credit card debts, an overdraft and some mail order credit; you could add them all up and borrow one loan to settle them. The idea is to make your finances easier and reduce your monthly outgoings. In some instances you can reduce the interest rate that you are paying.
• Loans for people with adverse credit. If your credit rating or score is poor you may have difficulties getting a loan. There are specialist loan companies offering loans in this sector but the rates of interest could be higher. You can check your credit report before you apply with Experian.

• Find out what's available compare loans with Our Personal Loan Section and find the right deal for you.
• Don't overstretch yourself - make sure you can afford the repayments.
• Check the interest rate or APR (Annual Percentage Rate) being charged on the loan.
• Check what fees you will need to pay to set up your loan.
• Check how much you will be charged in early redemption penalties (also known as a redemption fee) if you pay back the loan before the end of the loan term.
• Make yourself aware of all repayment options including payment holidays or deferments – these can give you a break from making repayments over an agreed period of time. Taking advantage of a payment break may mean you incur a penalty or an increase in the overall interest you pay on the loan.

Firms lending money to customers have to be licensed by the Office of Fair Trading (OFT) under The Consumer Credit Act 1974. The Act also requires that:

• you are given full written details of the true interest rate (ie the APR).
• you get a cooling-off period to consider if you want to proceed with the loan agreement or if you want to change your mind and cancel the agreement.

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A Typical APR (Annual Percentage Rate) is the interest rate most lenders quote when advertising personal loans.

It is not as straightforward as it sounds, although the lender may quote an Annual Percentage Rate, which is the amount the loan will end up costing you including interest and charges, you may actually end up paying more or less than the quoted rate.

This is because lenders use a system called risk-based pricing to calculate the typical APR of a personal loan. This includes assessment of each individual's circumstances and credit history before deciding the interest rate that they will offer them. A lender has to offer their typical rate to more than 66% of people who qualify for their loans so it is possible that you won't get this rate.

Some loan providers charge you if you try to repay your loan early. An early repayment penalty could be the equivalent of 1 or 2 month's interest. Generally, the earlier in the term you repay your personal loan, the higher the penalty.

Not all loan companies make this charge. If you think you could be able to repay your loan before the end of the term, look for a loan with no early repayment penalties

Your credit report is prepared using information from:

• Public records: electoral roll information, court judgments, individual voluntary arrangements and bankruptcies.
• Information provided by lenders and financial institutions: credit accounts, credit applications and financial associations.

The contents of your personal credit report have a bearing on whether or not you are given credit. Your credit rating may also affect the interest rate you are offered by lenders, which could lead to higher costs when borrowing.

Other factors can contribute to a lending decision; the information provided on your application form, for instance. Your credit report however is a major factor.

You have the right to view your credit report to ensure it is accurate. You are entitled to apply to have any errors corrected.

If you are unable to keep up with the repayments on a Secured Loan you could lose your home. Think very seriously before taking out a loan secured on your property.

Adverse credit rating. This is the term used for people who have a poor credit rating or history. This may be because they have bad debts, mortgage arrears or a County Court Judgment against them.

APR. This stands for Annual Percentage Rate which is the overall cost of borrowing on any monies outstanding on your loan.

Arrangement fee. A fee charged by some lenders for arranging a loan.

Credit reference agencies. Credit reference agencies keep account of your credit history. This information is passed to financial institutions when applications are made for a loan or other form of credit.

Debt consolidation loan. Designed to simplify your finances by moving your debts from credit cards, overdrafts etc into one larger loan.

Early repayment penalty. A charge made if you pay off your loan early (ie before the official end of the term).

Loan payment deferment. Where a loan company allows you a break from the scheduled repayments to your loan. Sometimes known as a payment holiday.

Payment protection insurance. An insurance policy arranged to pay an agreed amount if you're unable to work due to illness, accident or redundancy. This can be separate to your loan and from a separate provider and help you to keep up payments on your loan.

Personal / Unsecured loan. Personal loans are offered on the basis of your credit rating. You do not have to offer any security for the loan.

Secured loan. This is where you offer your property as security for the loan. If you fail to keep up repayments on a loan secured on your home the lender has a claim on the property.

Typical APR. The APR a lender will offer the majority of borrowers. The typical APR will be offered to more than 66% of borrowers. The typical APR is usually ‘subject to status’ which means you may not qualify depending on your individual circumstances.