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How to Get a Loan: How to Apply

  • Before you complete a loan application, it’s important to determine how much you can afford and shop around to find the best lender.
  • To qualify for the best personal loan interest rates, you should have a credit score in the 700s.
  • If you need a personal loan, you have multiple borrowing options, including debt consolidation loans, wedding loans, home improvement loans and medical loans.
  • When you’re ready to apply for a loan, you’ll need to provide proof of employment and proof of income.
  • Before approving you for a personal loan, the lender typically conducts a credit check, which adds a hard inquiry to your credit report.
  • Be sure to compare rates and get a personalized quote based on your credit score with a banking app like MoneyLion.

It would be great to have an unlimited amount of money and never have to worry about paying for car repairs, medical care and other necessities.

For most people, that’s just not how life works. Fortunately, banks, credit unions and consumer lending companies offer a variety of loan products to help you recover from financial challenges.

To help you understand what’s involved with getting a personal loan, we put together a guide outlining the 10 steps involved in determining your financial needs, finding the right lender and limiting interest and fees. Learn how to get a personal loan by following these guidelines.

How to get a personal loan in 10 steps

If you’re ready to apply for a loan, follow these steps to increase your chances of approval:

1. See if you can afford it

The first step is to determine how much you can afford to borrow. Think about how much money you need, how much debt you have and how much you can afford to pay each month. Use a loan calculator to experiment with different loan terms to find out exactly how much you can afford.

2. Check your credit score

Your credit score has a big impact on your loan terms and ability to qualify for credit. People with high credit scores have access to the lowest interest rates, reducing the total cost of borrowing. Having a low credit score or no credit score tends to come with high interest rates and extra fees.

To avoid surprises, check your credit score before you apply for a personal loan. The requirements vary from one lender to the next. You generally?need at least 580 to qualify for a loan, though a score in the 700s is necessary to guarantee a favorable rate of interest. Some lenders specialize in personal loans for bad credit, but remember that a low score will cost you more money.

3. Decide what type of loan you need

“Personal loan” is a broad term that includes several types of loans. Before you apply for funding, determine which of these loans you need:

4. Shop around and compare lenders

Some lenders offer better terms than others. Consider these factors when you’re comparing your options:

Get a quote for a personal loan with no effect to your credit score Check your eligibility and unlock your dreams with no hard credit check today! Personal Loans with Mouse Cursor LEARN MORE

5. Choose a lender

Once you compare payments, fees and other terms, choose a lender. Be sure to read the fine print before you sign anything. Just because a lender charges the lowest interest rate doesn’t mean it’s the best fit for your needs. For example, one lender may have a lower interest rate than the others, but perhaps it charges a 10% origination fee.

6. Apply for prequalification

The next step is to prequalify for the loan. Prequalification involves submitting basic information to the lender and asking them to determine if you’re likely to qualify. Note that prequalification isn’t a guarantee that the lender will approve your application. It’s just one step on the road to taking out a personal loan.

You typically need to submit your name, contact information, desired loan amount and employment data. This step doesn’t have any impact on your credit score.

7. Gather your loan documents

When you’re ready to apply, be prepared to provide the following:

8. Submit your application

This is one of the easiest steps in learning how to get a loan. All you have to do is submit the application. This does affect your credit score, as the lender uses the information you provide to pull a copy of your credit file.

Once you submit an application, it may take as little as a few days up to 1 week or more to get approved. You can speed up the process by completing every field on the application and having all requested documents ready for the loan officer.

There’s no guarantee you’ll be approved, but you may be able to increase your chances of approval by paying your bills on time, keeping your debt at a manageable level and asking a friend or family member to serve as a cosigner. Another option is to apply with a co-borrower, or a person who agrees to share responsibility for the loan.

9. Get funded

If you’re approved, it typically takes between a day and a week for the funds to show up in your bank account.

10. Start making payments

When you sign the loan agreement, your lender will give you an amortization schedule, which lists your payment due dates. Make sure you submit your first payment by the due date listed in this document.

Common personal loan requirements

Lenders will have a list of requirements for getting a loan improved, which may include:

What to do if your application is denied

Your lender may deny your application for the following reasons:

If your preferred lender won’t approve you, consider applying for a no-credit-check loan or looking for alternative funding sources. For more advice, we have a separate guide on what to do when a loan is denied.

How to Get a Loan FAQs

What are the types of personal loans?

When you apply for a personal loan, you can opt for an unsecured loan or a secured loan. A secured loan is backed by collateral, which is a valuable asset that the lender can sell if you don’t repay the loan as agreed. Vehicles, jewelry and fine art are just a few examples of the collateral used to secure personal loans.

Does applying for a personal loan impact my credit score?

Yes. When you apply for a loan, the lender does a credit check. This places a?hard inquiry?on your credit report, which may cause your score to drop a few points. An inquiry may have a bigger impact if you don’t have much credit history.

Can I get a loan if I have bad or limited credit?

Yes. If you have limited credit or a low credit score, you may be able to get a payday loan or a personal installment loan. Your bank may also give you a loan if you have a family member or friend who’s willing to act as a cosigner or a co-borrower.

Get I get a personal loan without proof of income?

This depends on your financial situation. If you have an excellent credit score, you may be able to get a personal loan even if you don’t have proof of income. Another option is to put up collateral for a secured loan.

How long does it take to get a personal loan?

This depends on several factors, including which lender you use and how prepared you are for the application process. If you have all the documents you need, it may take just 2 or 3 days to get your loan funds after approval. It may take longer if the bank needs to verify your information.

About the Author

Leigh Morgan
Leigh Morgan Personal Finance

Leigh Morgan is a seasoned personal finance contributor with over 15 years of experience writing on a diverse range of professional legal and financial topics. She specializes in subjects like navigating the complexities of insurance, savings, zero-based budgeting and emergency fund development.

In the last five years, she’s authored over 300 articles for credit unions, digital banks, and financial professionals. Morgan is also the author of “77 Tips for Preventing Elder Financial Abuse,” a book focused on helping caregivers protect the elderly from financial scams.

In addition to her writing skills, she brings real-world financial acumen thanks to her previous experience managing rental properties as part of a $34 million real estate portfolio.

About the Reviewer

Blake Esken
Blake Esken Los Angeles Times

Blake Esken has over 15 years of experience in product management and has been a member of the Los Angeles Times staff for over five years.

As part of his role at the Los Angeles Times Commerce Team, Blake acts as the in-house reviewer and fact checker for LA Times Compare. He supervises all content for compliance and accuracy and puts to use skills he has honed through years of experience managing high-stakes projects for a range of industry-leading companies.

He has a strong background in data analysis, compliance, and communication, which allows him to support LA Times Compare through fact-checking in an effort to provide up-to-date and factual information across our content.

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