Compare UK loans for young people aged 18 or over

At age 18, you can apply for a loan in the UK. Here's how to compare your options - and what to know about debt.

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Rachel Wait

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Loans enable you to borrow a lump sum of cash that you then repay in fixed monthly instalments over a set term. They can be a popular way to borrow money to help you pay for a new car, consolidate existing debt or pay for home improvements.

If you apply for a loan, you’ll pay interest on your repayments. The amount of interest charged on your loan depends on a range of factors, including your credit score. The better your credit score and history, the more likely you are to qualify for the best rates.

By the same token, if you’re young and have yet to build up a credit history, you’ll likely struggle to secure the most competitive interest rates or even get accepted for a loan at all.

Lender Minimum age Minimum income Customer type Link
Lendable 18 £800 per month Not specified Read our review
Everyday Loans 18 No minimum income specified Not specified Check eligibility
Guarantor My Loan 18 No minimum income specified Not specified Check eligibility
118 118 Money 18 £700 per month New or existing customers Check eligibility
NatWest 18 No minimum income specified Existing customers only Read our review
Royal Bank of Scotland 18 No minimum income specified Existing customers only Read our review
Bamboo 18 No minimum income specified New or existing customers Check eligibility
1plus1 Loans 18 No minimum income specified New or existing customers Check eligibility
Zopa 20 £12,000 per year New or existing customers Read our review
Fluro 20 £850 per month New or existing customers Check eligibility
My Community Bank 21 £18,000 per year New or existing customers Check eligibility
Shawbrook Bank 21 £15,000 per year New or existing customers Check eligibility
Bank of Scotland 18 No minimum income specified Existing customers only Read our review
Barclays Bank 18 No minimum income specified Existing customers only Read our review
Ulster Bank 18 No minimum income specified Existing customers only Read our review
AIB (NI) 18 No minimum income specified New or existing customers Read our review
Halifax 18 No minimum income specified New or existing customers Read our review
Virgin Money 18 No minimum income specified Existing customers only Read our review
HSBC 18 £10,000 per year New or existing customers Check eligibility
Nationwide BS 18 £700 per month Existing customers only Read our review
Monzo Bank 18 No minimum income specified Existing customers only Read our review
Tesco Bank 18 No minimum income specified New or existing customers Read our review
Danske Bank 18 £16,000 per year Existing customers only Read our review
TSB 18 £850 per month New or existing customers Read our review
MBNA Limited 18 No minimum income specified New or existing customers Read our review
Abound 18 No minimum income specified New or existing customers Check eligibility
Lloyds Bank 18 No minimum income specified Existing customers only Read our review
First Direct 18 £10,000 per year Existing customers only Read our review
M&S Bank 18 £10,000 per year New or existing customers Check eligibility
Admiral 18 £19,000 per year New or existing customers Check eligibility
Novuna Personal Finance 21 £10,000 per year New or existing customers Check eligibility
Santander 21 £10,500+ for loans up to £19,999, or £20,000+ for loans between £20,000 and £25,000 New or existing customers Check eligibility
Creation Financial Services 23 £9,600 per year Existing customers only Read our review
Churchill 18 years £850 per month after tax Not specified Check eligibility
BetterBorrow 18 years No minimum income specified Not specified Check eligibility
Reevo Money 21 years or older £15,000 Not specified Check eligibility
Finio Loans 18 No minimum income specified New or existing customers Check eligibility
John Lewis Finance 20 £12,000 per year New or existing customers Read our review
Loans 2 Go 21 No minimum income specified Not specified Check eligibility
Minty Loans 21 years No minimum income specified Not specified Read our review
Toot Loans 23 years or older £1,000 monthly income Not specified Read our review
Fluent Money 18 No minimum income specified Not specified Read our review
Plend 21 No minimum income specified Not specified Read our review
Oakbrook Loans 18 No minimum income specified Not specified Read our review
LiveLend 18 £12,000 per year Not specified
Norwich Trust Limited 21 £1300 per month New or existing customers Read our review
Late repayments can cause you serious money problems. See our debt help guides.

What loans are available to young people?

Turning 18 can be exciting. After all, you’ll now be legally allowed to vote and drink. You’ll also be able to take out a loan.

However, getting a first time loan as a young person may be more difficult than simply applying and getting approved. That’s because you’ll have little to no credit history which means lenders cannot assess how reliable you are as a borrower. You may also not have much in the way of savings. This means your loan options may be more limited.

But the good news is you may be able to access one of the following options:

  • Personal loans

    A personal loan lets you borrow a fixed sum of money over a set term and you repay this in monthly instalments. To increase your chances of getting accepted when you’re young, it can be worth applying for a loan with your current bank.

    Because you’ll have already established a relationship with your current bank – perhaps you hold a bank account and a savings account with that provider – they might be more willing to give you a loan. The downside is that it might not offer the best rate on the market.

    Alternatively, you could compare other lenders and use an eligibility checker or “soft search” which will show you the loans you’re more likely to get accepted for without damaging your credit score.

  • Guarantor loans

    With a guarantor loan, a friend or family member guarantees the loan you apply for. This means that if you are unable to repay the loan, your guarantor will be responsible for paying it off.

  • Car loans

    If you’re looking to buy a car, there’s a number of different car finance options to suit a wide range of monthly budgets.

  • Student loans

    If you’re planning to go to university, you’ll be able to apply for student finance, including a tuition fee loan and a maintenance loan to help with your living costs. You’ll repay this loan once you’ve graduated and start earning above a certain income threshold.

  • Arranged overdrafts

    If you’re a student, there are student bank accounts available with favourable overdraft terms. If you’re not, an arranged overdraft can offer you flexibility but you’ll want to look closely at the fees and interest charges involved.

Loans jargon explained

  • APR. The annual percentage rate (APR) takes into account the headline interest rate as well as any compulsory charges.
  • Representative example. Used to show consumers the standard costs that would apply to most successful loan, credit card or mortgage applicants.
  • Interest rate.The interest rate is a charge for borrowing and is a percentage of the amount of credit.
  • Eligibility. This is how likely you are to get accepted for a credit product such as a loan, and will take a number of factors into consideration.

How do loans for young people work?

Loans for young people work in the same way as any standard loan. You borrow a sum of cash (usually between £1,000 and £25,000) and you then pay back that amount in monthly instalments, with interest added on top. Personal loan terms typically range from 1 to 7 years.

If you’re a young person with a limited credit history, the amount of interest you pay on your loan will likely be higher compared to someone who has an established credit history. Most personal loan rates are fixed, so your monthly repayments remain the same during the term of the loan.

Be aware that if you want to pay off your loan early, you’ll often be charged a penalty fee (sometimes referred to as an early repayment charge).

Should I take out a loan for young people?

Before taking out a loan it’s crucial to work out whether you would be able to afford to repay it. This can be much harder when you’re young because your financial circumstances are likely to be more changeable and less established.

Taking out a loan comes with risks, and it’s important to understand these risks before you dive in. Get it wrong, and you could land yourself in serious financial difficulty or damage your credit record – making things much harder when you need to get a loan in the future.

Consider whether you really need to borrow the money and if you do, whether you could use an alternative, cheaper option such as a credit card or overdraft. If you still want to apply for a loan, it’s a good idea to start small and borrow a small amount over a short term.

Can I get a loan at 18 years old?

Yes, once you turn 18, you’re eligible to take out a loan or other credit product. Whether you’ll be able to get a loan will depend on a range of factors, such as:

  • You’re a UK resident
  • You don’t have a bad history of credit
  • You have a regular income
  • The loan won’t be used for purposes such as gambling or setting up a business

Image of a man with laptop and caption: the average apr of a £5,000 loan is around 8%.

What is a credit score and how does it affect me getting a loan?

Your credit score is used by lenders to determine your creditworthiness. If you have a good credit score, this indicates to lenders that you have paid back debts in the past and have not missed payments. The higher your credit score, the more likely you are to get accepted for a loan.

Why is it harder for young people to take out loans?

It can be harder for young people to take out loans simply because you’re likely to have a limited credit history. This means lenders will have difficulty assessing your creditworthiness and how responsible you are as a borrower. Without knowing how likely you are to repay the loan, lenders will be more reluctant to offer you money.

Because lenders will view you as higher risk, if you are accepted for a loan, you’ll probably pay a higher interest rate and you might not be able to borrow as much.

If you get accepted for a loan and repay it on time, your credit score will gradually improve. However, if you miss payments and default on the loan, this will be recorded on your credit report which could negatively affect your credit score.

Your employment status could be another reason why it’s harder to be accepted for a loan. Lenders tend to favour borrowers who have remained in the same job for a few years as this stability reassures them that you’re more likely to meet your monthly loan repayments.

How can a young person improve their credit rating and their chances of getting a loan?

Firstly, check you’re registered on the electoral roll as this will show lenders you have a fixed address. Next, check your credit report to see if there are any errors. If there are, contact the credit reference agency to get them corrected.

Also ensure you pay bills on time and if your landlord includes your bills in your rent, ask if your name can be put down on some of them.

5 tips for getting first time loans

  1. Show that you can save. If you can show the lender you have a savings pot to fall back on if you struggle to meet your repayments, the lender may be more willing to approve you. If you apply for a loan with your current bank, they will be able to easily view your savings history.
  2. Apply for a lower amount. Start small. Applying for too much when you have little credit history or don’t earn a high income can be a red flag to lenders and result in an automatic rejection. Instead, opt for a lower amount and prove to lenders that you’re a responsible borrower.
  3. Get on the electoral roll. Now that you’re old enough and have the power to vote, get yourself registered! This has the added bonus of bolstering your credit score.
  4. Get a letter from your employer. If you’re only employed casually or have not been employed for long, a letter from your employer stating the security of your employment may help your application.
  5. Use an eligibility checker. This only uses a soft credit check to tell you how likely you are to be accepted for a particular loan, so you can apply with confidence. This stops you from making multiple loan applications that can have a negative impact on your credit score.

At Finder, we run soft searches with a range of lenders in seconds, meaning that you’ll be able to get realistic rate quotes for loans you’re likely to be approved for, without any impact on your credit score. This can be a really smart way to avoid disappointment, protect your credit record and to only focus on lenders who are likely to approve you.
Infographic showing loan application process

How to compare loans for teens and young people

The quickest and easiest way is to use Finder’s personal loan comparison tables. Compare interest rates carefully and aim to keep the overall cost as low as possible, while ensuring you can still afford the repayments.

Once you’ve found a suitable loan, use an eligibility checker to check your chances of being accepted for the loan, whether there are any fees and how much you will be able to borrow.

  1. The overall cost.
    This should be your primary focus when considering different loans (or other types of credit). Aim to keep the overall cost as low as possible while ensuring you can afford the repayments.
  2. Whether you’re eligible
    At 18 years old or as a young person, you may well find that the lenders offering the best rates aren’t interested in you. That’s because each lender has a limited pool of funds to lend out, and they’ll aim to lend it to the safest prospects they can, to reduce the risk of losing any money if a borrower defaults on (fails to repay) their loan. But this doesn’t mean you can’t shop around. Use our “soft search” eligibility checker to quickly work out whether or not you’re likely to get approved.
  3. The interest rate.
    Is the rate competitive? Is it fixed or variable? A fixed rate will remain the same for the full term of the loan, while a variable rate could change – not good at a time when interest rates are rising. Keep in mind that the advertised “representative APR” only has to be given to 51% of successful applicants. The remaining 49% (usually those with a lower credit score or limited credit history) will likely be offered a higher rate.
  4. How much you’re able to borrow.
    Lenders offer varying minimum and maximum loan amounts, but what you’ll be allowed to borrow will ultimately depend on what the lender deems you can afford to repay. Lenders must lend “responsibly”, which means considering each borrower’s unique situation (income, outgoings, job stability, credit history etc.) to ensure they are only offered loans that are affordable.
  5. Early repayment terms.
    Clearing expensive debt can save you money in interest, but different products have different early repayment terms. Will paying the money back early have a penalty? Will it actually save you any money? It’s worth checking before you apply. A fractionally better rate that comes with unforgiving early repayment terms could be a false economy.
  6. Any special features of the offer.
    It’s important to take into account any value-adding features of any credit, whether it’s cashback on a loan or a points scheme on a credit card. Weigh up the real financial benefits of these, but don’t be too swayed by them.
  7. The fees you’ll be charged.
    There are different types of fees you can be charged, ranging from setup fees to annual fees and early repayment fees. Find out what fees are associated with your loan before signing on the dotted line.

Personal loan cost comparison

Loan amount: £5,000
  • Loan term: 3 years
  • Interest rate: 19.9%
  • Monthly repayment: £181
  • Total interest: £1,533
Loan amount: £5,000
  • Loan term: 3 years
  • Interest rate: 29.3%
  • Monthly repayment: £201
  • Total interest: £2,250

What about a loans broker?

A broker will find the best rate available to you from its panel of lenders, taking into account your individual circumstances. Normally this service is free, because the broker will earn a referral fee from the lender.

As long as you bear in mind that they don’t normally scan the whole market and will use selected lenders, a broker can take the strain out of finding a competitive deal.

Alternatives to loans for 18 year olds and above

Used correctly, credit builder cards can help you to improve your credit score over time. However, they typically come with low credit limits and high interest rates so it’s important to pay off your balance in full each month.

Alternatively, you could speak to your bank about extending your overdraft and asking for more favourable conditions. Interest rates on overdrafts can be high so they may not always be the best option.

Pros and cons of loans for under-21s

Pros

  • Easy access to the funds you need. This is an obvious ‘pro’. Get access to the funds you want to make the purchase you need.
  • Build up your credit history. A loan can help you to establish and build your credit history. This ultimately affects your eligibility for other types of loans and can give you access to better interest rates in the future.

Cons

  • You may only be eligible for a small loan. If you have no credit history or limited credit history, you may only be eligible for a small loan, which may not be enough for what you need.
  • Risk of getting into debt. Taking on any loan comes with risk, so make sure to budget your repayments and don’t apply for a higher loan amount than you can afford to repay.
  • Potentially high rates. As harsh as it may seem, to a lender, 18-year olds represent a greater risk, which they’ll normally look to offset by charging a higher rate.

Bottom line

Taking out a loan can be an easy way to borrow extra funds and, providing you’re sensible, it can also help to build up your credit score. However, interest rates can be high and if you’re unable to keep up with your repayments, you could do your credit score more harm than good. Always consider your options carefully before applying.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
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Writer

Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

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  • Loans for international students

    Discover the most reliable means for migrants and international students to borrow money in the UK
  • Loans for apprentices

    Our guide explores all the best options for getting a loan when you’re an apprentice.
  • Compare personal loans for new employees

    If you have just started a new job, you could still be accepted for a personal loan. See how lenders compare and give yourself the best possible chance of being accepted.

2 Responses

    Default Gravatar
    ByronSeptember 19, 2018

    Is there any possible way u can help me find a place who will accept me for a loan as I’m struggling a lot because I have just turned 18 n haven’t really got a credit score at all

      AvatarFinder
      johnbasanesSeptember 19, 2018Finder

      Hi Byron,

      Thank you for leaving a question.

      I understand that it may be difficult taking out a loan with low credit score. There are options available and you may check it on this page. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!

      Cheers,
      Reggie

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