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Are you trying to pay off credit cards but need help to keep up with fast-growing interest? Did you need money to move since you spent your savings to pay for closing costs on the home of your dreams? Do you need extra cash to go on a networking trip so you can find a higher-paying job? 

The good news is you can apply for a personal loan to cover expenses like these and more. If you’re ready to apply for a personal loan, follow these seven simple steps to get the funds you need. 

An illustrated list breaks down how to apply for a personal loan in seven steps.

Step 1: Figure out how much you need to borrow

Personal loans can range from $100 up to six figures.¹ But you should only borrow the amount you need, not the highest amount you can get. You’ll have to repay the full amount and any interest it earns. 

To decide how much you need to borrow, consider: 

  • How much money you need to cover your expense(s)
  • How much of your savings you can use
  • Your ability to repay the loan

If you’re unsure of your borrowing power or approval odds, you can also get pre-qualified to see your loan term options. To pre-qualify for a personal loan, you might have to fill out a form on the lender’s website with the following information:

  • Loan amount
  • Ideal monthly payment
  • Borrowing purpose
  • Name and address
  • Social Security number
  • Estimated annual income
  • Co-signer details (optional)

Step 2: Check your credit

Credit scores and history are significant considerations when lenders evaluate loan applications because they can show how well you’re handling your existing debt. Lenders can use this information to assess your credit risk and offer you appropriate loan terms. 

You can review your credit reports through one of the major credit bureaus – Equifax, Experian, or TransUnion – for an idea of what lenders will see when they pull your credit. If your credit score is in a good range (670+), you can typically expect to pay a lower interest rate and receive the loan without collateral. Other factors, like your financial history, income, and debt, will affect your loan terms. 

If your credit score is 579 or below², you will have a harder time finding favorable personal loan terms and a lower likelihood of getting approved. In such cases, it’s better to wait and improve your credit score – especially if you can hold off for one to three months. To get things rolling, you can build your credit with a secured credit card, pay down some of your debt, and get negative entries removed from your credit report.

Start building credit with everyday purchases – apply for a Chime Credit Builder Secured Visa®.

Step 3: Research and compare lenders

Shop around for the best deal when looking for a personal loan. During the research process, consider each loan amount, the monthly payments, annual percentage rates (APY), missed payment penalties, and term lengths.  

To help you start your search, here are a few notable personal loan options for 2024 in no particular order. 

These personal loan rates and term lengths are accurate as of 9/18/23. This table is for informational purposes only and is not intended to offer financial advice.

LenderLoan amountsAPYTerm lengths
Avant³$2,000 to $35,0009.95% to 35.99%12 to 60 months
Discover4$2,500 to $40,0007.99% to 24.99%38 to 84 months
LightStream5,6$5,000 to $100,0007.99% to 25.49%2 to 12 years
SoFi7,8$5,000 to $100,0008.99% to 25.03%2 years to 7 years
Navy Federal9$250 to $50,0007.99% to 18.00%Up to 180 months
Upstart10,11$1,000 to $50,0005.2% – 35.99%36 to 84 months
Wells Fargo12$3,000 to $100,0007.49% to 23.24%12-84 months

Next, you should narrow down your options based on the likelihood of approval. Review each lender’s eligibility criteria and see how factors like your credit history, income, and collateral stack up.

Four illustrations accompany the four most common eligibility criteria for a personal loan: credit score, annual income, debt-to-income ratio, and minimum age requirements.

For starters, you should meet these basic criteria before applying to increase your approval chances and secure a reasonable APY:

  • Good credit score: If you have a FICO® score of 670 or above, you have a decent shot at getting favorable personal loan terms. However, your approval odds may drop if it drops below 579 (“poor” credit).13,14
  • Steady income: Depending on how much you’re borrowing, you may have better chances of being approved if you earn at least $15,000 a year.15 However, some lenders will grant you a low-income loan as long as you have some form of annual income.16 You might have to prove this by submitting tax returns, bank statements, or pay stubs. 
  • Low debt-to-income ratio (DTI): Most lenders want your DTI to be under 40%.17 To calculate your DTI ratio, add up your monthly expenses and divide them by your gross monthly income. 
  • Legal age: You have to be 18 or older to take out a personal loan. 

Step 4: Gather the necessary documents

The last step before you can apply to get a loan is gathering all the necessary paperwork. 

Four illustrations accompany a list of the necessary documents required to apply for a personal loan.

The lender will use this information to verify your identity and your ability to pay back a loan. Even if you know the information below off the top of your head, you should still have all the documents on hand if the lender requests proof. 

  • Social Security card: To fill out a loan application, you need your Social Security number. 
  • Proof of identity: To prove that you are who you claim to be, you will likely need to upload two types of identification. These can be copies of a birth certificate, driver’s license, passport, military ID, certificate of citizenship, or a state ID. 
  • Proof of address: Whether it’s due to state laws or a need to know you’re financially stable, you may need to show the lender a bill or lease so they can confirm where you live.
  • Income verification: To show that you earn enough to repay the loan, you may need to submit your W-2s or tax returns for the last year.

Step 5: Fill out the application and wait

After choosing a lender, you can officially complete your personal loan application. Remember that pre-qualification doesn’t guarantee approval – you’ll still need to submit the loan application and wait to hear back. 

Depending on the lender, they might review and approve your loan on the same day. However, lenders typically have to verify the information you provided and run hard credit checks, so it can take them a week to approve or deny your application. 

Also, you may have to pay an origination fee when you submit your application, which goes toward the cost of processing your application. A typical origination fee hovers between 0.5% to 1% of the total loan amount, which lenders will add to your loan balance – if they approve you. However, you can ask to waive or reduce the fee, and they usually can’t collect it if your loan application is denied.

Step 6: Accept the loan offer or consider alternatives

If you’re approved, the lender will send you the final loan documents detailing the:

  • Amount of money they’re lending you
  • Interest rate they approved you for
  • Number of months you have to pay the loan 
  • Amount you will need to pay every month

If the terms they send work for you, you can accept the personal loan offer and wait for the lender to send you the funds. 

But don’t be discouraged if the lender denies your application. A denial can happen if your credit score is too low, you have too much unresolved debt, or you ask for more money than the lender thinks you can reasonably repay. 

If a lender denies your personal loan application, here are a few things you can do to increase your approval odds when you reapply: 

Step 7: Access the funds

The time it takes to receive loan money usually depends on the type of lender you borrow from:

  • Online lenders tend to distribute funds faster – usually the same day your application is approved. 
  • Lenders like banks and credit unions may take a couple of business days or even a week to send the funds. 

Most lenders will deposit your money directly into the account they have on file once they approve you, but some may mail out a check instead. 

Personal loans can come in handy when you need a little extra cushion, whether it’s for debt consolidation, a big-ticket purchase, medical expenses, or an emergency. Make sure that you will qualify for a personal loan when you need one by getting your credit in order now. Of course, if you don’t have time to build your credit, there are other options. 

Read more about how to get a loan with bad credit

FAQs

Still have questions about how to get a personal loan? Find answers below. 

What is the difference between a secured loan and an unsecured loan?

Secured loans require collateral, like a house, boat, vehicle, jewelry, art, investments, or insurance policies, which the lender will own if you can’t repay the loan. Unsecured loans don’t require collateral but are typically only available to people with good credit. 

Are there emergency personal loans? 

Yes, you can get an emergency personal loan. Some lenders will send you money the same day you apply. However, these loans typically have more fees and higher interest, so it’s best to go with a standard personal loan if you can. 

How can I get a personal loan with bad credit?

If you have bad credit, you’ll likely need to shop around to find fair personal loan terms. To find personal loans you will qualify for, apply for smaller loan amounts, look for secured loans, or consider getting a co-signer. 

What type of personal loan is easiest to get approved for?

The easiest loans to get approved for are payday loans and no-credit-check loans. However, you should only use these as a last resort. These types of loans have high interest rates and fees that often keep borrowers trapped in debt.

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1 Information from Experian’s What’s the Smallest Personal Loan I Can Get? As of 10/3/23: https://www.experian.com/blogs/ask-experian/what-is-smallest-personal-loan-i-can-get/

2 Information from Experian’s How to “Fix” a Bad Credit Score as of 9/22/23: https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/how-to-fix-a-bad-credit-score/

3 Information from Avant’s Pursue Your Goals With A Personal Loan as of 9/18/23: https://www.avant.com/personal-loans/

4 Information from Discover’s Discover® Personal Loans as of 9/18/23:/23: https://www.discover.com/personal-loans/

5 Information from LightStream’s Personal loans as of 9/18/23: https://www.lightstream.com/consumer-loans

6 Information from Forbes Advisor’s LightStream Personal Loans Review 2023 as of 9/18/23: https://www.forbes.com/advisor/personal-loans/lightstream-personal-loans-review/

7 Information from SoFi’s Compare Rates and Terms as of 9/18/23:/23: https://www.sofi.com/personal-loans/personal-loan-rates/

8 Information from SoFi’s Personal loans as of 9/18/23: https://www.sofi.com/personal-loans/

9 Information from Navy Federal Credit Union’s Personal and Home Improvement Loans as of 9/18/23: https://www.navyfederal.org/loans-cards/personal-loans.html

10 Information from Upstart’s A personal loan for your personal needs as of 9/18/23: https://www.upstart.com/personal-loans

11 Information from Upstart’s What are my payment obligations? as of 9/18/23: https://upstarthelp.upstart.com/making-loan-payments/what-are-my-payment-obligations

12 Information from Wells Fargo’s Reach your goals with a personal loan as of 9/18/23: https://www.wellsfargo.com/personal-loans/

13 Information from Experian’s What Credit Score Is Needed for a Personal Loan? as of 9/18/23: https://www.experian.com/blogs/ask-experian/what-credit-score-is-needed-for-a-personal-loan/

14 Information from Experian’s How to “Fix” a Bad Credit Score as of 9/22/23: https://www.experian.com/blogs/ask-experian/credit-education/improving-credit/how-to-fix-a-bad-credit-score/

15 Information from Loanry’s How Much Income Do You Need to Get a Personal Loan as of 10/3/23: https://www.loanry.com/blog/how-much-income-do-you-need-to-get-a-personal-loan/

16 Information from Credible’s 8 Low-Income Loans: Personal Loans for a Tight Budget as of 10/3/23: https://www.credible.com/blog/personal-loan/low-income-loans/

17 Information from Discover’s What is Debt-to-Income Ratio? As of 9/26/23: https://www.discover.com/personal-loans/resources/learn-about-personal-loans/debt-to-income-ratio/

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