Loans for Young Adults.

Sourcing some cash when you’re young can be a mission.

Applying for multiple loans like a headless chicken is not the answer.

Start your financial journey on the right foot with the Choose Wisely compare table.  

It's better to be safe than sorry.

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Loans for Young Adults

Loans for Young Adults - What to expect

Most lenders require you to be 18 in order to take out a loan, with some stretching out their minimum age specification to 21 or 23 years old. All the lenders in the table will only accept applicants aged 18 and over.

If you’re looking to borrow credit for the first time, you should expect to pay higher interest rates than those that have a proven credit history.

Do not apply to multiple different loans or credit products in a short space of time as it will have a negative effect on your credit score, making it even harder to get hold of the credit you want. Find out about your credit file with our credit file spot check guide.

Can I get a loan with no credit history?

Before you feel disheartened, it’s not impossible for those with no credit history to get a loan but it can be expensive. As you have no or limited credit history, lenders can’t predict how you’ll handle credit in the future, so they compensate by charging you higher interest rates.

Before applying, check out your credit file with sites such as ClearScore, Noddle or Experian. Here, you’ll be able to spot any errors or see if there is anything pulling down your score, like an unpaid overdraft for example.

Once you’ve checked out your credit file, you can start making changes to improve your credit score, giving you access to better credit with lower interest rates. For example, registering on the electoral register can really boost your score. Check out our ‘How to improve your credit score’ guide to find out what else you can do to improve your score.

Consider your reasons for needing a loan. If you can hold off from borrowing until your credit score has improved, this could be a better option than paying for an expensive interest rate.

If you’re having difficulty paying back your repayments, contact the Money Advice Service for free, impartial advice.

Loans for young people with no credit history - the alternatives

Depending on how much you need to borrow and when you need the money, there are other options available to you:

Credit Builder Credit Cards: Designed for those with limited or no credit history, these credit cards can help you build up your credit score and can even offer limits of up to £1000.

Authorised overdraft\: Compare bank accounts with Choose Wisely and find a bank that offers a low or free-fee overdraft facility. Great option for small emergencies but don’t use it for big spends as it can get severely pricey. Find out more here.

Borrow from Family or Friends: No one likes to ask but often, borrowing from your family and friends is the cheapest and safest option. Ask around and see if anyone can help.

Claim benefits and grants: There’s a huge variety of benefits out there and you can find out how and where to claim in our guide: ‘How to: Claim the benefits you’re entitled to.’ If you’re at university, make sure you’re claiming all the grants and loans that are available to you.

You might be surprised to find out where your money goes. Cut spending and make savings using the Choose Wisely Budget Planner.

Where to get debt help

When you’re ready to find help, there are loads of free debt counselling services available. These services will give you a route to get back on track. Check them out:

Final Word

It’s good to know you’ve got options but getting a loan isn’t a light decision, especially if you’re paying interest rates on the higher end of the spectrum. Compare all your options and have a look at your current spending to find out if you can make any cutbacks before you go down this route.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk