The truth is that younger people can often have a hard time getting their hands on a competitive loan, but that doesn’t mean that there aren’t plenty of borrowing options available for those who don’t have much experience within the financial world.
Though younger people can struggle to borrow because they’re often seen of more of a risk than people who have steady incomes and background in financial durability, that doesn’t mean that places won’t offer you a loan if you’re under a certain age. If you have experience with paying back debts, or you’ve used credit cards in the past, then you may find that getting a loan is easier than you think. Additionally, if you have a regular income, getting a loan becomes much simpler.
Getting a Loan when You’re Under 25
Though there aren’t many hard and fast rules about the exact age that you should consider taking out your first loan, there are ages that can make it more difficult for you to access the finance that you need, basically because of the stigma surrounding people in those age groups. Getting a loan when you’re under the age of 25, or getting a loan when you’re over the age of 60 can be equally difficult, because there are prime ages considered to be ideal for borrowing based on various factors to do with risk.
In broad terms, the older you are, the less time you probably will have to pay back the money that you borrow before you pass away. At the same time, the younger you are, the less experience you’ll have in paying debts, and the less chance you have of ensuring a regular income. A lot of young people have a bad credit score simply because they haven’t had a chance to take out a loan in the past.
Of course, though it might be harder for you to get a loan when you’re under a certain age, there are ways that you can improve your chances of being approved by different lenders. The main thing to remember is that you should minimize your appearance of risk whenever possible.
How Old Do You Have to Be to Get a Loan?
Almost all lenders will restrict applications to people who are over the age of eighteen. If you attempt to apply for a loan before this age you will not be approved. Additionally, there are some lenders that will only ever accept applicants that are over the age of 21. However, even if you are at the minimum age to be approved for a loan, the chances are that you will be taking out your very first loan, which means that this is your first chance to experience debt. This obviously makes it harder for lenders to look back over your history and determine how much of a risk you are. As such, it can make it much harder for you to be approved.
If you have a steady job and you’re over the age of eighteen, then there’s a chance that you may not have been working for long, which could add to your perceived level of risk. Lenders often prefer people who have been within their job for at least one year, as this gives the impression of stability and indicates that a person can be relied upon to pay their bills each month.
Your age becomes less of a factor in learning as you get old, until the time when you are designated as being “too old” which is usually around the age of 60 and over.
Young People Alternatives to Loans
If you’re struggling to get your hands on a loan, or you’re concerned that the loan you apply for will not be approved, there are some alternatives that you can consider if you need access to finances as quickly as possible. For instance, credit cards are often seen as a flexible and efficient way for younger people to borrow cash, particularly if you only want a small amount of money at any given time.
There are a wide number of banks and financial providers that offer credit cards designed specifically for students. Usually, these cards come with a higher rate of interest than some standard cards, but they can be more understanding of your circumstances. Additionally, there are credit cards that have been created specifically for people with bad credit. These cards are designed to help you build a credit history so that you’re more likely to be accepted for a loan or mortgage in the long run.
Additionally, you may consider speaking to your bank about the possibility of extending your overdraft to give you more favorable conditions for borrowing money when you need it more. Overdrafts can sometimes be expensive and restrictive, but if you speak to your bank first they may be able to create an arrangement for you.