Loans of any kind are not something to be jumped into quickly. Before you apply for a loan you'll need to consider factors including the reason for needing extra finance, the repayments, your credit score and the documentation you might need to present in order to be accepted for the loan. Legal services such as those offered by can help with the certification of these important documents.

Why do you need a loan?

If you're taking out a loan for a big purchase such as a car, wedding or DIY project, then you're probably doing it for the right reasons. However, if you're thinking of taking out a loan for an expensive watch, holiday, or a low cost item that you could do without, consider whether you might be better off waiting a while and simply saving the money.

In some cases, a loan might be the best way to get, or accomplish, what you're after but take the time to really think about it to make sure you are making the right choice. Determine whether there is an alternative option to a loan – perhaps try saving some money or going through a 0% finance deal. Take a look at all the options before making a decision.

Can you afford the repayments?

Money pileMost loan companies will either provide a calculator for loan repayments or they'll be able to give you a rough idea of what you'll be paying back (this can often depend on your credit score).

Once you know how much you might be paying back, create a simple spreadsheet that adds this into your outgoings compared to your income. If you finish the month in a negative state or very close to the breadline, then this loan might not be for you, at this particular moment in time.

Make sure you include things like eating out, clothes shopping and any other spending in your outgoings too.

Is your credit good enough?

If you have been approved for store cards, mobile phone contracts, mortgages and so on, then it's likely that your credit score is good. If you're not sure of your credit score, it might be that you apply for a loan and get denied. This in itself can have a negative effect on your credit rating.

To be safe, do an online check with something like Expedia to get an idea of your credit score. These reports will give you a guide as to your likelihood of getting accepted for a loan. If it shows your credit score as bad, you'll be able to see why and can take steps to fix it.

What documentation might you need?

Depending on the kind of loan you need you may have to show anything from simple ID to two forms of ID, proof of income, an affordability assessment and proof of address too. If you don't have these kinds of documents then you might not be able to get a loan. Take a look at the details of the individual loan to see what you might need to produce with your application, and make sure you have all your paperwork in order.

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