How to Get a Personal Loan in 5 Steps

Personal loans provide flexible financing for many purposes. Popular uses include consolidating high-interest debt, tackling home projects, covering veterinary or medical costs, and more. Many lenders offer personal loans, although application processes and borrower requirements can vary. If you’re considering a personal loan, here’s what to expect from the application process, factors that might influence loan approval, and more.

Apply for a personal loan with these 5 steps

1. Compare loan options

Since many lenders offer personal loans—and rates and fees vary—it’s wise to compare loan options. As you shop around, consider personal loan APRs, income and credit score requirements, and typical approval time frames. Understanding these factors can help you find the right loan with the best rate.

You’ll also want to look at loan amounts because these differ by lender, too. For instance, SoFi offers personal loans from $5,000 to $100,000, while Discover’s personal loans range from $2,500 to $40,000.

2. Prequalify

Once you’ve narrowed your options, prequalify with your chosen lenders that offer this option—unfortunately, not all lenders do. Prequalifying can help you better understand the rate, term, and loan amount you might qualify for—and it generally only results in a soft credit pull, which won’t harm your credit score. To prequalify, you’ll need to share some basic personal and financial information with your lender.

3. Gather documentation

Taking the time to gather documentation and personal information before applying can make the process easier. Besides personal information—such as your name, address, email, phone number, employer name and address, and Social Security number or Individual Tax Identification Number—you may need to provide your lender with a copy of your driver’s license and copies of recent pay stubs, W-2s, and utility bills.

4. Formally apply

The next step is formally applying for a personal loan. Most lenders offer online loan applications, so you can apply from the comfort of your home. Depending on the lender, you may also be able to apply over the phone or in person.

When you apply, you’ll need to provide detailed personal and financial information and verify your identity, income, and address. Once you submit your personal loan application, your lender will conduct a hard credit pull, which may harm your credit score by a few points.

5. Await approval

After formally applying, you’ll need to wait for your lender’s loan decision. Approval time frames for personal loans vary by lender. You could receive a decision as soon as the same day you apply or within a few days to a week. Lenders typically disburse personal loan funds soon after approval.

Factors that can influence personal loan approval

Your lender will consider several factors when evaluating your personal loan application, including the following.

Credit

Credit score requirements vary for personal loans, but your lender will review your credit score and history. A good or excellent credit score may increase your chances of qualifying for a personal loan with the best rate. While you might still be eligible for a personal loan with fair credit, your interest rate will likely be higher.

Your lender will also review your credit reports to ensure you have a history of on-time payments and no recent delinquencies.

Employment

Many lenders require that borrowers be employed to qualify for a personal loan, and they’ll verify your employment as part of the application process. Being unemployed could make it more difficult to get a personal loan, though certain lenders may be willing to overlook this factor if you have significant assets and strong credit.

Debt-to-income

Your lender will also review your income and debt as part of the application process. It will use that information to calculate your debt-to-income ratio(DTI). In general, lenders require a DTI below 35% or 40%, though some may accept a higher DTI if you have significant assets and strong credit.

How to speed up the loan application process

Gathering any needed documents before you apply is the best way to ensure a fast loan application process. If you need funds quickly, you can also choose a lender that offers fast loan approval and disbursement. Some lenders may approve you within a day of your application and disburse your loan shortly afterward.

Time Stamp: Applying for a personal loan is simple

If you’re considering a personal loan, you can expect a fairly simple application process. Getting a loan like this isn’t as involved as getting a mortgage, but it’s helpful to have copies of needed documentation handy before applying. Consider asking your chosen lender which documents you should have on hand to help streamline the application process.

Frequently asked questions

How long does it take to be approved for a personal loan?

Approval time frames for personal loans differ by lender. Some may approve you within one day, while others could take as long as one week. Compare time frames before applying, especially if you need funds quickly.

Can I use a personal loan for any purpose?

You can use a personal loan for many purposes, but generally not for college or university tuition, gambling, investing, home down payments, or illegal activities. Ask your lender about any use restrictions if you have concerns.

What happens if I can't repay my personal loan?

If you can’t repay your personal loan, it could damage your credit score. Your lender will report missed payments to the credit bureaus, and those missed payments will appear on your credit reports. Once you're a few months behind on payments, your loan account may also be sent to a collections agency.

What is the easiest way to get a personal loan?

The easiest way to get a personal loan is to ensure you meet your chosen lender’s borrower requirements and apply online. Gathering necessary documentation before applying can make the process easier, too.

What makes me eligible for a personal loan?

Borrower requirements vary by lender. But in general, you need fair or good credit, verifiable income and employment, and a manageable debt level to get approved.