Myths about borrowing money broken down

Father And Child In Car

We all might have had times when we’ve turned to our friends or family to borrow some cash – whether it be for a cup of coffee, a round of drinks or a weekday lunch.

However, when it comes to borrowing larger sums of money from banks or lenders, it can sometimes seem like more of a taboo and as a result people often avoid talking about the subject altogether.

Whether you’re planning a wedding, buying a new car, or refurbishing your home, a personal loan might be something you’ve considered to help finance these costs – and you wouldn’t be alone in that. In fact, our research shows 59% of UK adults have borrowed money from a financial lender at some point.

If it is something you’re weighing up - but you’re not sure about the ins and outs - then this is the blog for you! Here, Sally Conway, Head of Consumer Communications at Shawbrook Bank Personal Loans, breaks down some of the common myths and assumptions about personal loans.


  1. Myth One: You will always get the APR advertised

    APR stands for annual percentage rate and is used to help you understand the cost of borrowing. It takes into account the interest rate and any additional charges involved in the cost of the loan.

    The Representative APR is an indicative rate used by lenders in advertising and other marketing materials. This is the rate that at least 51% of successful applicants will receive. The adverse of this is that up to 49% of applicants could end up getting a different rate (the actual amount of interest you pay) that is higher or in some cases lower, than their advertised Representative APR.

    If you do get a rate that’s higher than the Representative APR, the loan repayments will be higher making the cost of borrowing more expensive.

    Our research into the borrowing behaviours of Brits recently found that one in five (19%) admitted to not knowing what the APR actually meant when taking a loan in the past. It’s essential that you pay close attention to the APR you are being offered before accepting a loan as this can vary greatly from the Representative APR.

    At Shawbrook, we’re committed to being transparent with everyone who applies for a loan. What you see is what you get. When you apply for a quote with us, it’s important to us that you have all the information you need before applying so we let you know your guaranteed personalised rate right from the start. Find out more about our commitment to Transparency here.

  2. Myth two: You must have a perfect credit score to be accepted for a loan

    While your credit score is a factor that is taken into consideration when evaluating your eligibility for a loan, there are several other factors that will impact the final decision.

    For example, lenders will also take into consideration anything from your income and repayment capacity to how you’ve managed credit in the past. 

    Although you don’t need a ‘perfect’ score, it’s worth taking time to improve your credit score and financial health. Having a strong credit history can help to improve your chances of being accepted for credit and getting a better rate.

    There are a few quick and simple ways that may help you to boost your credit score before you apply if you are worried about it. This can include registering on the electoral role, checking for any mistakes on your credit report, or cutting any financial associations with ex partners.

    For more tips, read our guide on how to maintain a healthy credit score.


  3. Myth three: The more loans you apply for, the more likely you will be accepted

    You can apply for a loan regardless of whether you have existing loans or not - but remember multiple credit applications could do more harm than good.  

    When you formally apply for any form of credit, a lender will run a ‘hard’ search and this will be added to your credit report. If you make lots of credit applications in a short space of time that require hard searches, this will be visible to other lenders and could give the impression that you’re too keen to borrow. This can cause lenders to question your financial circumstances.

    So, when a lender reviews your application and weighs up your repayment capacity, they will be able to see how many applications you’ve made recently as well as how you have managed debt in the past. Both of which could impact their decision of whether to offer the loan. To avoid unnecessary searches, only apply for credit when you need it and can afford it. It’s also a good idea to focus on credit that you have a good chance of being approved for.

    When shopping around for the best deal, make sure you choose providers who carry out a soft search. These searches check your report without leaving a visible footprint for other lenders to see. This will help you to find out the likelihood of being accepted and assess your options without impacting your credit score.

  4. Myth four: Only salaried applicants can be accepted

    Although it can be more difficult for those who are self-employed to be accepted, it doesn’t mean all applications will be rejected.

    You don’t necessarily need to have a fixed amount of income to be accepted. However, you will need to meet other requirements and be able to prove you can afford the repayments. Income is one of the important factors when lenders assess your loan eligibility, but it isn’t necessarily a deciding one.

    If you are self-employed, you can still be approved for a loan so long as you have a good credit history, can satisfy the lender's requirements for affordability and provide the documents to support it. You will often be asked to provide payslips as evidence of your financial situation and what the outlook is for the longer-term until the repayments are finished.

    Lenders will have different requirements for their products. Make sure you check the eligibility criteria before applying as there may be a minimum salary requirement. If you’re unsure, it’s always worth speaking to the lender before you apply.

  5. Myth five: It takes a lot of time and paperwork to apply for a loan

    Once upon a time, applying for a personal loan meant going to your bank and filling out a stack of paperwork, then waiting for days or even weeks to hear back about whether it’s been approved.

    Thanks to technology, the application process is now far more streamlined and with a few clicks can be completed online from the comfort of your home. The speed of your application will vary from lender to lender and will depend on the type of loan you’re applying for and your circumstances.

    At Shawbrook, once you fill in our simple online form, we’ll provide you with a personalised quote without impacting your credit score. This means you can take the time to consider if this is right for you. If you decide you’d like to go ahead with your application, we’ll ask you for more information and conduct a full credit search in order to proceed with your application. If your loan application is successful, funds will be transferred into your account within three working days after the signed documents are received.

    If you want to find out more about what information you’ll need to provide to get a personalised quote for a Shawbrook personal loan, our guide on the application process is the ideal place to start.


    All loans are subject to status. The interest rate offered will vary depending on our assessment of your financial circumstances and your chosen loan amount. Terms and conditions apply.

    All stats used are from our consumer research survey of 2,000 UK adults, carried out by OnePoll in February 2022