How to get a personal loan in 6 steps
Need to apply for a personal loan? Follow our six simple steps on how to get a personal loan, from checking your eligibility to comparing rates.
Dr. Megan Hanna
It can take anywhere from a day to a week to apply for and get a personal loan. However, the time it takes to receive a personal loan varies based on factors such as the lender you choose, your credit score and how accurately you complete the application.
Generally, you can get a personal loan faster if you have a high credit score and earn enough income to repay the loan easily. You can also speed up the time it takes to get a personal loan by accurately completing your application and promptly providing your lender with any required documents (e.g., pay stubs).
Your personal loan might also be approved and funded faster if your lender allows you to apply online. Plus, if the loan is with your existing bank or credit union, the funds could be deposited into your bank account as soon as the day you apply.
A personal loan provides consumers with money they can use for virtually any purpose, which is paid back in fixed monthly payments. Personal loans are usually unsecured, meaning your lender won’t ask you to offer any collateral (e.g., vehicle, home).
Personal loan companies lend as little as $250 and as much as $100,000, with repayment terms ranging from six to 84 months.
You can get a personal loan from many finance companies, such as banks, credit unions and online lenders.
While you can potentially get same-day personal loan funding from payday lenders and auto title loan companies, do your best to avoid these loans because they usually carry extremely high interest rates and fees. Consumers who get personal loans from these types of lenders often get stuck in a cycle of borrowing that’s difficult to escape.
To avoid getting caught in a debt trap, exhaust all other funding options before considering a payday or title loan. For example, you might borrow money from family and friends, seek help from a local nonprofit or even take on a second job. Additionally, you might consider getting a lower-cost payday alternative loan (PAL) from a credit union.
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You’ll need to provide personally identifiable information and details about your debt and income when applying for a personal loan. Some of the most common things you’ll need to include with your loan application are your:
When you apply for a loan, take the time to accurately and thoroughly fill out the application. If there are errors or you forget to provide some information, it may take your lender longer to process your application or your loan application might even be declined.
One of the easiest things you can do to get a personal loan faster is to have all the necessary documents on hand before you start working on the application. After you’ve gathered all the information you’ll need, carefully ensuring your application is accurate will help speed up the process.
“We often see decision delays because we need additional information,” said Matt Lattman, vice president of personal loans for Discover. “Gathering all of your documents can speed up the application process. One of the biggest factors in receiving a decision quickly is if the application is complete.”
Another thing you can do to increase your odds of getting approved quickly for a personal loan, according to Lattman, is to “do your homework before you apply.” Doing your homework on a personal loan could include such things as:
Ultimately, the best way to get a personal loan faster is to do everything in your power to make your lender’s job easier. This includes applying for a loan that fits your needs, ensuring your application is accurate and complete, providing all the required documentation upfront and quickly responding to your lender’s requests.
When you get a personal loan, your credit score may decrease slightly because of a hard credit inquiry from the lender. Your credit score is likely to improve if the personal loan replaces revolving debt (lowering your credit utilization ratio) and you make your payments on time. Conversely, your credit score might worsen if you make your loan payments late.
While each lender has a different credit score requirement, you’ll generally need a score of at least 580 to 660 to qualify for a personal loan. Many lenders share their minimum credit score requirements upfront, so you know if you’re eligible before applying. You can also usually see if you qualify with no credit score impact, as many lenders use a soft credit check to pre-qualify you.
Some lenders charge fees for their personal loans, such as origination fees, application fees, prepayment penalties and late fees. Origination and application fees are charged upfront to process your loan, whereas prepayment penalties and late fees are only charged if you repay the loan early or make a late payment.
You can compare personal loan costs by evaluating the annual percentage rate (APR), which includes the interest rate and any required fees, such as origination and application fees.
You may be able to get a personal loan approved and funded as soon as the day you apply, but funding could take up to a week. The funding speed largely depends on the lender you choose, your qualifications, the accuracy of your application and how quickly you provide the lender with any required documentation.
Lenders with a simple online application and automated approval process generally offer the quickest funding speeds; these include mainly online lenders, but some banks and credit unions also provide same-day funding to their existing customers. The biggest factors you can control are how quickly and accurately you fill out the application and respond to your lender’s requests for information.
Need to apply for a personal loan? Follow our six simple steps on how to get a personal loan, from checking your eligibility to comparing rates.
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