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Banking Basics

How to Apply for a Personal Loan

A personal loan can be a good short-term cash solution for borrowers. Applying for a personal loan is a fairly straightforward process. Learn the ins and outs and how to best prepare for the application.

Katana Dumont • January 19, 2023

In This Article

  1. How to get a personal loan
  2. 5 steps to apply for a personal loan online or in person
  3. Improving your odds of getting approved for a personal loan
  4. FAQs
  5. Pursue your financial goals with a personal loan

Need some extra cash? You aren’t alone. More Americans are borrowing money, with 22.1 million people taking out a personal loan in 2022 alone.You can use personal loans for various purposes and get one from banks, credit unions, or online financial institutions.

Are you interested in taking out a personal loan but need help figuring out where to get one or how to apply? Read on to learn more about the application process for taking out a personal loan.

How to get a personal loan

Applying for a personal loan is similar to applying for any other type of credit, such as a credit card. When you apply for a personal loan, you’ll give the lender your financial and personal information. Then the lender will decide if your qualifications and financial standing grant you approval or denial for funding.

Here’s what to know ahead of time to ensure a smooth application process:

  • What’s the average annual percentage rate (APR) on a personal loan? The average interest rate for personal loans varies. The APR can range depending on your creditworthiness, income, and the length and size of the loan.
  • Where can you apply for a personal loan? You can apply online or in person through your lender (like a bank, credit union, or credit card issuer).
  • What do you need to get a personal loan? You’ll need to verify your personal information (identity, income, etc.). Documentation like government-issued identification cards and bank statements are usually acceptable but check with the loan issuer to confirm what it will accept for proof of address.

5 steps to apply for a personal loan online or in person

Applying for a personal loan either online or in person is simple! Here are the basic steps to take:

1. Assess how much you should borrow

Ask yourself how much you need to borrow and how much you can reasonably afford to repay with interest. Try to borrow only what you need and make sure the payment amount is manageable.

Don’t overextend yourself and your finances. It might be worth employing a financial advisor to help you decide your best plan.

2. Check your credit score and credit report

Your credit score and credit standing are the biggest considerations when lenders evaluate a loan application. Personal loans mostly rely on your creditworthiness, so consider checking your credit scores and reports from each of the three major credit bureaus before you apply. Make sure to look for inaccuracies in your credit report.

If your credit score is in good standing and in a higher range, you can typically expect to pay a lower interest rate. Other factors, such as your financial history, income, and debt will play a role in determining your eligibility for a personal loan.

Want to improve future loan applications? Start building credit with on-time payments and everyday purchases when you open a Chime Credit Builder Secured Visa® Credit Card.2

3. Apply for pre-qualification

Pre-qualifying for a personal loan means you are pre-screened before you complete a formal application. This process allows you to review the offers you may receive from lenders and compare your options.

During the pre-qualification process, the lender will typically perform a soft credit check, which won’t affect your credit score.3 This means there’s very little harm in getting pre-qualified by multiple lenders so you can compare your estimated rates and payment amounts.

You’ll need to provide basic financial information and personal details, such as your name, date of birth, income, employment status, and loan purpose.

4. Choose your lender and loan

Shop around for competitive terms and rates when getting a personal loan. Consider the loan amounts, monthly payments, and interest rates from various lenders. Think about the pros and cons of borrowing from different financial institutions such as banks and credit unions. For example, credit unions tend to offer more flexible terms and lower interest rates, even to bad-credit borrowers.

After comparing your options, make sure you can make the monthly payments and that it fits into your budget. Research which lenders offer the features and services that you’re looking for. Consider things like credit building assistance or flexible payment schedules.

5. Submit a formal application

After choosing a lender, you can officially complete your personal loan application. Remember, pre-qualification doesn’t guarantee approval – you’ll still need to apply formally. Gather all your documents, fill out the application, submit it, and wait to hear back.

Depending on the lender, your loan might be reviewed and approved on the same day. A lender will typically run a hard credit check when finalizing your application. A hard credit check could drop your credit score by a few points but shouldn’t have any long-term effects.4 If you’re approved, the lender will send you the final loan documents detailing the terms of your loan, interest rate, length of the loan, loan amount, and your monthly payments.

Improving your odds of getting approved for a personal loan

Don’t be discouraged if your personal loan application is denied. A lender can deny your application if your credit score is too low or if you have too much unresolved debt. Other reasons could include asking for more money than the lender thinks you can pay back.

If a lender denies your loan application, there are some steps you can take to improve your chances of getting approved in the future:


What are the fees associated with a personal loan?

Many personal loans charge an origination fee to process a loan application. An origination fee is typically 0.5% to 1% of the total loan amount, and are determined by factors like your credit score and the loan amount.5 Origination fees are typically taken from the balance of the loan or added on top of it.

What do I need to pre-qualify for a personal loan?

To pre-qualify for a personal loan, you’ll likely need to provide the following information:

  • Requested loan amount
  • Preferred monthly payment
  • Borrowing purpose
  • Name and address
  • Social Security number
  • Estimated annual income
  • Whether you’re applying with a co-borrower

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

Some lenders may offer same-day approvals, but if more information and documents are needed, approval can take longer.

How long will it take for a personal loan to be funded?

How quickly you receive the loan money will largely depend on the type of lender you use. Online lenders could provide quicker funding — sometimes same-day, while banks and credit unions could take a couple of business days or more to finance the loan.

Pursue your financial goals with a personal loan

Whether it’s for debt consolidation, a big-ticket purchase, medical expenses, or an emergency, personal loans can come in handy when you need a little extra cushion. Don’t let the application deter you.

Learn more about personal loans so you can apply with confidence.

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1 Information from Reuter's U.S. consumer loan delinquencies seen surging to 13-year high in 2023 - study as of January 6, 2023:

2 On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to TransUnion®, Experian®, and Equifax®. Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

3 Information from Forbes' How Do Personal Loans Affect Your Credit Score? as of January 6, 2023:

4 Information from Experian's How Many Points Does an Inquiry Drop Your Credit Score? as of January 6, 2023:

5 Information from Cornell Law School's origination fee as of January 6, 2023:

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