How to Apply for a Personal Loan: Step-by-Step Guide
Getting a personal loan these days is often just a few clicks away. First, you’ll check rates by prequalifying, which doesn’t hurt your credit score. Then, to move forward, a formal application is required. Most of the time, you’ll know if you’re approved for the loan the same day.
Applying for a personal loan is generally an easy process, especially if you know what to expect ahead of time.
- Most lenders let you prequalify without affecting your credit score.
- Comparing multiple loan offers can help you find a lower rate and save money.
- Preparing your documents and checking your credit ahead of time can improve your chances of approval and help you get your loan faster.
Are you ready to apply?
Taking a few minutes to prepare before applying for a personal loan can improve your chances of approval, help you get funded faster and may even help you qualify for a lower rate.
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Check your credit score.
It’s possible to get a personal loan with bad credit, but rates are typically high. If your score is below 670, you may want to take time to improve it before applying, if you can. -
Order your credit reports.
You can get one free credit report each week from all three credit bureaus. Order yours and look for mistakes, like credit listed in your name that you did not take out. Your credit report will give you information about how to dispute any errors you find. -
If possible, pay down some existing debt.
Making a large payment on your debt before applying for a loan can help improve your debt-to-income (DTI) ratio. This figure compares your current debt to your income. Making an extra payment or two should lower your DTI, which lenders look on favorably. -
Get documents ready.
Some lenders can verify your information electronically. If not, you may need to provide your ID, proof of income, bank statements and other similar documents. Check the lender’s website for more details, as each lender requires something different. -
Unfreeze your credit.
It’s good practice to keep your credit frozen, but don’t forget to unfreeze it before applying for a loan. You can still prequalify while your credit is frozen. A credit freeze stops lenders from conducting hard credit checks, not soft credit inquiries.
How to apply for a personal loan in 5 steps
1. Figure out how much money you need and what you can afford to pay each month
Calculate how much money you need and only borrow what’s necessary. It can be tempting to request a little bit more than you really need, but the more you borrow, the more interest you’ll pay.
Once you know how much to request, use a personal loan calculator to get an idea of your monthly payment and the total interest you’ll owe. Increase loan terms to reduce your monthly payment, and decrease them to save interest and pay off your loan faster.
2. Prequalify with multiple lenders
Prequalifying for a personal loan lets you check your rate without hurting your credit. Most lenders have a prequalification tool on their website. Think of prequalifying as getting a quote and shopping around for multiple quotes can help you find the best rate.
You can prequalify with lenders individually, or you can use a marketplace like LendingTree. A marketplace can make things easier because you only have to fill out one form, and you’ll have a single platform to compare offers.
3. Choose a loan
When picking out your loan, focus on how much total interest you’ll pay and your monthly payment. The lowest monthly payment doesn’t always mean the cheapest loan — it could just be the loan with the longest term (and the most total interest charged).
Don’t forget to account for any origination fees when selecting your offer. Lenders typically deduct these fees from your loan before sending you your money. If you’re taking out a $10,000 loan with a 5% origination fee, you’ll actually get $9,500.
Also, research the lender before making a final decision. Read personal loan lender reviews and check the Consumer Financial Protection Bureau’s complaint database to get an idea of the company’s customer service.
4. Submit application
Most loan applications are now available online, even for brick-and-mortar banks and credit unions. The lender should already have a lot of the information it needs if you’ve prequalified. But you might have some administrative tasks to complete, like uploading documents.
Read your loan agreement carefully before signing. Check for fees and penalties, and make sure you understand your payment schedule. You may need to sign up for autopay, which is a good idea anyway so you don’t risk missing a payment.
5. Receive your loan and begin repayment
How long it takes for you to get your loan depends on the lender. SoFi and LightStream, for instance, provide same-day loans. But usually you should expect to wait one to three days before your funds will be available. Your bank may also put a hold on the funds. If so, you must wait for the money to clear.
Your first loan payment will typically be due 30 to 45 days after you signed your loan agreement.
LendingTree writer and personal loan expert Lauren Clifford shopped for a loan 15 times to see what the process is really like. Read her experience for practical tips and insights.
Special situations when applying for a personal loan
Lenders may require more documentation than usual if you’re self-employed. Prepare to provide tax documents as proof of income.
Freelancers and gig workers will need to provide proof of regular, consistent income, such as a bank statement showing consistent deposits.
If you’ve recently changed jobs, having a W-2 from your prior employer can give the lender a more accurate view of your work history.
Borrowers with little or no credit may want to consider taking a joint loan. The lender will consider your co-borrower’s credit history as well as yours. Just remember that late payments will hurt both of your credit scores.
Frequently asked questions
There isn’t one minimum credit score required to get a personal loan. Every lender sets its own standards, and some lenders consider factors other than your credit score when reviewing applications.
In general, lenders that work with borrowers with bad and fair credit typically require a score around 580 to 600. However, borrowers with scores of 670 or higher usually have access to more options and may qualify for lower interest rates.
According to LendingTree data, users who receive a personal loan offer through our marketplace have an average credit score of 653.
Lenders that specialize in quick loans usually provide same- or next-day funding. Timelines vary by lender. When you decide on a lender, check its website to see when you can expect your loan.
Applying for a loan can drop your score by a few points due to the hard credit hit, although no-credit-check loans exist. However, most lenders let you prequalify, or check your rates without impacting your credit.
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