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How to Apply for a Personal Loan & What You Need to Apply
Key takeaways
- Checking your credit score and comparing offers from multiple lenders before applying can help you secure the best possible loan terms
- Gathering required documents—such as proof of income, government ID, and bank statements—in advance helps speed up the approval process
- After approval, setting up autopay helps you avoid missed payments, which supports a healthier credit score. It may also earn you a rate discount
A personal loan is a great tool for achieving financial goals, including consolidating debt, covering unexpected expenses, and making a big purchase. But first, you need to apply for the loan and receive approval.
This guide breaks down each step of a personal loan application, explains what you need to apply for a personal loan, and describes key details like eligibility, documentation, and tips for faster approval.
Step 1. Check your credit score before you apply
Your credit score could play a major role in whether your loan application is approved and, if so, what terms you'll receive. Before applying, review your credit report and your credit score to see where you stand.
You can get a free credit report through AnnualCreditReport.com from one or all of the three major credit bureaus— Equifax®, TransUnion®, and Experian™.
Check your credit report to see if there are any errors that could be corrected in your favor. This could provide a simple way to improve your credit score.
You may be able to get your credit score—for free—from your bank, credit card company, or a credit monitoring service. If you want to improve your score, one place to start is paying down your credit card balances. This could improve your credit utilization rate, an important part of your credit score that reflects how much of your credit limit you are using. It could take one or two months for the results to appear on your credit score.
Step 2. Determine how much you need to borrow
Before submitting your application, determine your ideal loan amount and term length. You don't want to borrow more than you need, because you'll have to pay interest on the full amount of the loan. And if you underestimate your needs, you might have to search for an additional funding source.
Use an online calculator to estimate your monthly payment and affordability and see if your budget can cover the repayment plan. Ask yourself:
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Can I comfortably make the payment even if my expenses rise?
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Do I want a shorter term (higher payment, less total interest) or a longer term (lower payment, potentially more total interest)?
Step 3. Compare personal loan offers
Take time to compare personal loan offers from multiple lenders. Look for essential elements like:
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Interest rate and APR.
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Loan amount options and term choices.
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Estimated monthly payment.
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Funding time and disbursement—how quickly you receive funds and how they’re delivered.
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Whether it's a secured or unsecured personal loan. Secured loans, backed by collateral, may have lower rates than unsecured loans, where approval is based solely on creditworthiness.
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Any flexibility features like autopay discounts or the ability to add a co-signer or co-applicant.
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Personal loan fees, like origination charges, application fees, or late payment fees.
If available, start with lenders who offer prequalification for personal loans. Prequalification uses a soft credit check, so you can view potential rates with no impact on your credit score. When lenders do a hard inquiry, which will happen when you apply for a loan, it could have a small, negative impact on your score.
Comparing several lenders side-by-side is one of the most effective loan application tips for finding the right blend of rate, terms, and benefits.
Step 4. Gather the documents you need
Collecting the right personal loan documents early makes the process smoother and faster. Most lenders require:
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Proof of income (like pay stubs or tax returns) for income and employment verification.
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Bank statements and government ID for identity and financial history.
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Proof of address and employment details.
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Additional financial records if you’re self-employed.
If you’re applying digitally, find out what formats your bank will accept for your online personal loan application, such as PDFs and JPEGs. If you organize all the documents needed for a personal loan, or digital copies, in advance, you can shorten the time it takes to apply, and possibly to gain approval.
Comparing several lenders side-by-side is one of the most effective loan application tips for finding the right blend of rate, terms, and benefits.
Step 5. Submit your application
Once your paperwork is ready, it’s time to complete the application itself.
Whether you apply online, by phone, or in a branch, your lender will typically ask for information to evaluate your personal loan eligibility. If you’re applying with a co-signer or co-applicant, both applicants will be expected to provide information and documentation.
Be as accurate as possible because any errors could delay your personal loan approval. It's a good practice to double-check entries for typos (especially your Social Security number), make sure your income is stated accurately, and respond quickly if the lender follows up for additional documentation.
This is also when a hard credit check is triggered.
Step 6. Review and accept the loan terms
After application submission, you might receive a conditional approval if you meet the personal loan eligibility requirements. Carefully review the details of the offer, including:
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Interest rate and APR.
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Total principal borrowed.
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Term length and monthly payment amount.
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Whether there’s a penalty for paying extra on any given month or paying off the loan early.
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Fees.
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Any optional products (like payment protection), and whether they’re truly optional.
Before signing an agreement, make sure the terms align with your financial situation. If anything is unclear, ask questions before you accept.
Accepting the offer typically means signing electronically (for online applications) or signing documents in person. Either way, keep copies of your disclosures for your records.
Step 7. Receive your funds
Once approved, you’ll typically receive your money within one to five business days. This funding time and disbursement period varies by lender, but digital transfers can speed things up.
If you’re taking a debt consolidation personal loan, many lenders will send funds directly to the accounts you designate to pay off your existing balances.
What do I need to apply for a personal loan? A quick checklist
Here’s a personal loan checklist of what most lenders require:
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Government-issued ID. Driver’s license, passport, state ID, or a similar document
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Social Security number. For identity verification and credit check
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Proof of income. Recent pay stubs, W-2s, tax returns, bank statements
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Employment information. Employer name, address, and phone number to help with income and employment verification
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Proof of address. Utility bill, lease agreement, or mortgage statement
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Monthly bills. To help calculate your debt-to-income ratio and assess affordability
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Bank account information. Routing and account number for direct deposit of funds
Applying with complete and accurate documentation can speed up the process considerably.
FAQs
The length of time it takes to get approval for a personal loan depends on the lender. Many online personal loan applications provide same-day decisions, while traditional banks might take a few days for verification and underwriting.
Once a loan is approved, your funding time and disbursement might range between one and five business days.
Yes, you can get a personal loan if you are self-employed. Meeting personal loan eligibility requirements is the same for self-employed applicants—lenders just need more documentation to verify earnings.
Self-employed applicants may be asked to provide proof of income through tax returns, 1099 forms, invoices, and recent bank statements. A strong credit score and steady earnings history will enhance your personal loan eligibility and approval odds.
There are two ways to approach this question. The first is that you need to determine what your budget can handle. You can use an online calculator to get an estimate. It's also easy to list your monthly debt payments and average costs for other expenses, including food, transportation, savings, healthcare, phone, entertainment, and clothing. Then, think carefully about whether you can accommodate another monthly payment for this new loan.
The second part of the question involves how much a lender will allow you to borrow. You can use a lender’s calculator and/or prequalification tool to get an estimate of how much you are qualified to borrow.
You'll need to choose an amount that suits your needs, your qualifications, and your budget.
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