How to Get a Personal Loan in 7 Steps

Shopping for a personal loan doesn’t have to be complicated. Understanding how to get a personal loan — including where to start, what you need to apply and how to compare offers — can help you select the best personal loan.

Below are seven steps to help you navigate how to get a personal loan.

1. Check your credit

Before you take out a loan, check your credit score to assess your financial picture. A high score gives you a better chance of loan approval and a lower interest rate.

» How's your credit? Check your score for free on NerdWallet

Fix any errors on your credit report that might be dragging your score down. You can request a credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — and dispute wrongly reported missed payments or other inaccuracies.

Be sure to make on-time payments toward credit card and other loan payments, and keep your credit utilization (the amount of credit you use relative to credit limits) low as these are the biggest factors affecting your score.

2. Decide how much you need to borrow

You want to request a loan amount that allows you to meet your financial goal – but borrowing too much could stretch your budget to the max. Also, requesting too large of a loan could lead a lender to reject your application.

Before you apply for a loan, find out if the lender has a one-time charge called an origination fee. A typical origination fee is 1% to 10% of the loan amount, though not all lenders impose these charges. Origination fees are often deducted from your loan proceeds, so you may need to borrow more to cover the cost. » MORE: Compare loans with no origination fees

3. Calculate your loan payments

Knowing your estimated monthly payments can help you decide whether you can afford to take out a loan.

Use your credit score to estimate what annual percentage rate a lender might charge. While the APR you receive depends on your unique credit and financial profiles, as well as your lender’s underwriting, the table below shows estimated personal loan APRs based on credit score range.

Next, consider how long you’ll need to pay off the loan. A longer loan term means lower monthly payments, but you’ll end up paying more in interest.

Once you know your loan amount, rate and term, use our personal loan calculator to determine your estimated monthly payments. The best personal loans have payments that fit comfortably into your budget.

4. Research and compare lenders

You can get a personal loan from online lenders, banks and credit unions, but some lenders work better for certain borrowers and loan purposes than others. For example, some lenders offer features to help specifically with debt consolidation. Others specialize in lending to borrowers with bad credit.

It's a good idea to research different lenders to find one that’s best for your needs. Here are a few key features to compare between lenders.

• Credit score requirements: Online lenders tend to offer loans to borrowers with credit scores across the spectrum, while banks often require good to excellent credit. Credit unions are more likely to accept loan applications from bad-credit borrowers.

• Loan amount and repayment term availability: Personal loan amounts typically range from $1,000 to $100,000 with repayment terms from two to seven years. Look for lenders with loan amounts and repayment terms that match your borrowing needs.

• Funding time: You can expect to receive funds within a week after loan approval. Online lenders typically provide the fastest funding times, sometimes the same or next day after approving the loan application.

• Co-signed, joint and secured loan availability: Some lenders will allow you to add a co-signer or co-borrower to your loan application or pledge collateral to secure a loan. Opting for a co-signed, joint or secured loan may help you qualify or get a lower rate.

» MORE: Online vs in-person loans

5. Select a lender and complete your application

Once you’ve selected a lender that matches your needs, you can formally apply for the loan. Application requirements vary by lender, but you’ll likely need:

• Identification: A passport, driver’s license, state ID or Social Security card.

• Verification of address: Utility bills or lease agreement.

• Proof of income: Pay stubs, bank statements or tax returns.

The lender will run a hard credit check that may temporarily decrease your credit score by a few points. Hard inquiries can show up on credit reports for 24 months, but they won’t affect your credit score after 12 months.

Some lenders provide an immediate approval decision while others may take a couple days.

6. Read the fine print

Once you’ve been approved for a loan, carefully read over the terms before signing the loan agreement. In particular, watch for:

• Fees. Prepayment penalties — fees for paying off a loan early — are rare, but lenders may charge other fees, including origination and late payment fees.

• APR surprises. The total cost of your loan, including interest and any origination fees, should be clearly disclosed and figured into the APR.

• Automatic withdrawals. If a lender automatically withdraws loan payments from your checking account, consider setting up a low-balance alert with your bank to avoid overdraft fees.

• How extra payments are applied. Making extra payments above the minimum that are applied only to the loan principal saves you money on interest and helps you get out of debt faster, but not all lenders allow principal-only payments. 

• Hardship options. Some lenders offer personal loan deferment programs that let you skip or lower payments if you experience financial hardship, like a job loss or illness. 

7. Sign loan agreement and get funded

The final step to getting a personal loan is to sign the loan agreement. Expect to receive the funds within a week. Some lenders may provide same- or next-day funding after approval.

» MORE: How long does it take to get a personal loan?

Once you have your funds, make a plan to manage your personal loan payments. Your first payment will likely be due about 30 days after receiving your loan.

Setting up automatic payments can help you pay on time without having to remember any due dates.