Although age is a defining element in the eligibility criteria, someone who is 18 years old can qualify despite being young. Therefore, they can even apply for loans without any inhibitions. They have the perfect age to be eligible to borrow money after knowing how loans will work in their case.
However, despite having a favourable age, they might lack a perfect financial track record. This might be because they have not started earning yet. Besides, they might not have a credit history to portray how well they can manage and afford payments.
The lenders will be afraid to offer young borrowers financial help, thinking they are unfit to take on this financial responsibility. They are not wrong, as you have yet to witness financial challenges while you are still living under the supervision of your parents.
It is not that you are out of the borrowing league, as options are still accessible to you. Loans for young people in UK are among them that can sponsor your financial needs. A few lenders might charge high fees since the risk factor involved in lending to a younger person is higher.
How can you obtain a fair deal without burning a hole in your pocket? In that case, you must get a quick tour of this blog, which is going to spill some beans for you right here.
Essential revelations for young people about loans
Borrowing means you can have access to needful funds just when you need them with a promise to repay them within the specified duration. This is the most essential condition for getting a loan. You may be a newbie borrower since you want to borrow at a young age.
Therefore, the lender should not expect an elaborate financial record showing successful payments. When you are dependent on your parents to fulfil your financial needs, you are not in a position to be eligible for loans. You need to present some income stream to win the confidence of the lender.
Otherwise, you might have to get loans through your parents for study purposes and not for any personal necessity. Ask yourself a few questions to make sure that borrowing is your cup of tea.
1. What are the different types of income accepted?
If you have read up here, you are sure to have this question in your mind. This is because the lender wants you to show some kind of income. Therefore, it has become mandatory for you to figure out the acceptable types of earnings.
Getting a stable job might not be possible at your age. However, earning from a side job is doable even when you are continuing your studies. You can utilise the free time to work on specific projects.
The lender is ready to provide all these flexibilities with loans for people living on benefits. In this case, your earnings from the financial support that you obtain from the government will get the weightage. The likelihood of getting accepted for loans improves once you establish some source of income.
2. How can you build a credit history without borrowing?
Having a payment history to showcase is critical to take the first step in creating credit records. However, you have your parents to cover your monthly payments. It means you do not pay your bill on your own, and thus, you have no credit history.
One of the convenient ways to start building credit scores is by getting a credit card. Pay off the balance ahead of time or within the duration in order to create a positive credit history. You can opt for credit-building cards and make the most out of this purpose.
With favourable payment history and income evidence, you stand a good chance of getting a nod of approval from the lender. Regardless of your young age, you can convince the lender with these features.
3. What are the vital pointers to be on your checklist?
It should not be like since the option is within your reach; you must grab it at any cost. You must begin the process after assessing a few things that concern your financial health and ability at the same time. Think beyond credit records and income to get clarity on the decision.
Borrowing extent: Identify your necessity and affordability at the time of deciding the loan amount. Do not go for choosing a random amount that is not suitable for your circumstances.
Exit strategy: Cross-check if you can collect the necessary amount of loans within the given duration for repayment. Think twice if you are not sure about timely payments
Affordable offer: If you aim to get loans at pocket-friendly rates, you must compare offers from different lenders that are easy to achieve. Get a free quotation to find the best proposal according to your budget.
4. Are there diverse borrowing options for young people?
You must know one thing: age does not decide your financial credibility. Your young age does not restrict you from accessing different types of loan options. You can search for diverse borrowing options according to your needs. Whether or not, you will get approval will be decided later.
You are not supposed to hold an incredible credit history and convincing earnings at this young age. For this reason, the lender has made a provision wherein you can bring anyone who could be your parents to support loan payments on your behalf.
Here, you need not bother about loan repayment. The other person will take care of this aspect, provided they have perfect credit scores and stable earnings. You can get loan approval based on their financial condition.
Loans for education
As stated earlier, this age signifies the perfect time to get relevant degrees to strengthen one’s future career path. You might need financial assistance for education. Your parent’s income will be a criterion in this case, while you will have the liberty to repay the remaining loan debts after becoming salaried.
The bottom line
It might happen that you want to start your entrepreneurship journey when you are too young. Then, you must reach out for business loans that are meant for young people like you.