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How to Apply for a Personal Loan in 3 Steps

Applying for a personal loan involves three steps, from pre-qualification to approval. Have your documents ready to speed the process.
June 12, 2019
Loans, Personal Loans
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Applying for a personal loan may require more time and effort than applying for a credit card, but a bit of prep work can speed the process, and you may have your loan in hand by tomorrow.

Before you fill out a personal loan application, you need to:

  • Check your credit report and fix any errors. If your credit isn’t strong, look for quick ways to build your score.
  • Determine a loan amount that covers your needs, yet also fits into your budget.
  • Avoid taking on other forms of debt, which will increase your debt-to-income ratio and may lower your chances of qualifying for a loan.
  • Research the best places to get a personal loan. Options include online lenders, banks and credit unions, and each has pros and cons for different borrowers.

To apply for a personal loan, follow our step-by-step guide.

Step 1. Pre-qualify and review offers

Step 2. Fill out the loan application

Step 3. Submit the application and get approved

Step 1. Pre-qualify and compare offers

TIME: A FEW MINUTES PER LENDER

Pre-qualifying gives you a preview of the rates, payments and terms you might receive for a personal loan. The pre-qualification process typically involves a soft credit check, which doesn’t affect your credit score. It’s best to pre-qualify with multiple lenders and compare offers.

Most online lenders and some banks offer pre-qualification, which you can do on your desktop or mobile device and takes about five minutes per lender to complete. Be prepared to provide the following information:

  • Requested loan amount. Lenders typically offer personal loans from $1,000 to $50,000.
  • Purpose for the loan, such as funding home improvements, consolidating debt or paying moving expenses.
  • Your desired monthly payment and loan repayment term. Terms typically range from one to five years.
  • Basic personal information such as your name, date of birth, address, annual income and monthly mortgage or rent payment. Some lenders also request your Social Security number during pre-qualification.
  • A user name and password for the lender’s website.

After filling out the form, you’ll likely need to give the lender permission to perform a soft credit inquiry, and you’ll need to e-sign an agreement to receive documents electronically.

Within a few seconds, a new page appears announcing you’re pre-qualified (or denied), with a loan offer that displays rates and terms.

With offers from multiple lenders in hand, compare loan amounts, monthly payments, annual percentage rates, and features.

You may also receive an email from the lender congratulating you on your pre-qualification, with contact information for customer service and a list of next steps to complete the application.

With offers from multiple lenders in hand, compare loan amounts, monthly payments, annual percentage rates, and features like flexible payment options, credit-building help and direct payment to creditors if you’re consolidating debt.

» MORE: Pre-qualify with multiple lenders at one time on NerdWallet

Step 2. Fill out the loan application and gather documents

TIME: 20 TO 30 MINUTES

Once you’ve chosen a loan with the rate, terms and features that best fit your budget and match your borrowing needs, it’s time to complete a loan application.

Lenders give you some time to complete the application before your pre-qualification offer expires. For example, offers from online lender Marcus expire in 25 days, and online lender SoFi gives you 15 days.

Expect to provide the following information with your application:

  • Your primary phone number.
  • Social Security number if it wasn’t provided during pre-qualification.
  • Employment status and employer information.
  • Your education history, including the highest degree you’ve earned and graduation date.
  • Financial information, including total savings, retirement assets, equity in your home and the bank account where your paycheck is deposited.

Read the loan’s terms and conditions and agree to them by e-signing the document. The agreement certifies that all the information you’ve submitted on the application is correct.

It also authorizes the lender to take steps to verify your information, such as contacting your employer and pulling your credit reports.

Now is a good time to gather documents that verify your income and assets, including W-2s, pay stubs, tax forms, monthly statements for bank accounts, stocks and retirement assets.

Step 3. Submit the application and get approved

TIME: 20 MINUTES

Submitting the application triggers a hard credit inquiry. This can shave up to five points off your FICO score and remain on your credit report for just over two years.

Once the application is with the lender for final approval, you may need to verify your income, employment and assets with the documents mentioned in the previous step.

“If we do ask for documents, we will email applicants fairly quickly to let them know,” says David Green, chief product officer at Earnest, an online lender. You can scan, copy or take a picture of documents to submit them online, he says.

After signing the loan agreement, you may receive your money as fast as the same day, up to a week, via bank deposit.

If everything checks out, you’ll be approved for the loan. After signing the loan agreement, you may receive your money as fast as the same day, up to a week, via bank deposit.

Expect your first loan payment to be due within 30 days of funding. If you’ve opted in to automatic bank payments, the funds will be debited from the bank account you provided.

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