How To Get a Loan in 5 Simple Steps

A personal loan is a lump sum of money you borrow from a lender and pay back in fixed monthly payments over a set term, usually one to seven years.

Most personal loans are unsecured, so you don't need to put up collateral like a car or house. You can use the money for almost anything — debt consolidation, medical bills, home repairs or a big purchase.

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Although exact personal loan requirements and terms will vary by loan and lender, there are a few general actions you'll need to take to get any kind of loan. We'll break down exactly how to get a loan in this guide.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Key Takeaways

• How do you get a loan? Follow five steps: Check your credit, set your budget, compare lenders, prequalify with a soft check, then apply.

• Aim for a FICO score of 670 or higher: The U.S. average was 714 in early 2026, and 670-plus unlocks the best rates.

• Personal loan APRs run about 7% to 36%: The average on a 24-month bank loan was 11.86% in May 2026, per Federal Reserve data.

• Keep your DTI under 36%: Most lenders prefer a debt-to-income ratio below 36%, though some allow up to 43% or 50% with strong credit.

• Free tools speed things up: A DTI calculator, prequalification tool, loan payment calculator and credit score tracker help you preview your rate before you apply.

• Prequalify before you apply: A soft check previews your rate without affecting your score; only the full application triggers a hard inquiry.

Summary generated by AI, verified by MoneyLion editors

How To Get a Personal Loan in 5 Steps

Here's the quick version before you dig in.

1. Check your credit score to see where you stand.

2. Figure out how much you need to borrow and what you can afford to pay back.

3. Shop and compare lenders, including banks, credit unions and online lenders.

4. Prequalify with a soft credit check to preview rates without hurting your score.

5. Submit a full application, review the loan offer and accept the funds.

1. Review Your Credit History

Three of the most important factors that can determine the outcome of your getting approved for a loan are:

• Your credit history

• Your ability to repay the loan

• How much you have in personal assets

Your credit report shows the lender that you've handled your debts responsibly and paid your bills on time. Your credit score could mean the difference between a great interest rate and term and a not-so-great interest rate and term.

The average FICO score in the U.S. was 714 as of early 2026, and most lenders require a score of 670 or higher to qualify for the best rates.

To review your credit history, visit AnnualCreditReport.com to get a free report each week from each of the three big credit reporting agencies: Experian, Equifax and TransUnion. Check for any mistakes in your reports and address them immediately.

What Is Debt-to-Income Ratio?

Your debt-to-income ratio (DTI) is the share of your monthly income that goes toward paying debts. Lenders use it to decide if you can handle another monthly payment.

To calculate it, divide your total monthly debt payments by your gross monthly income, then multiply by 100. Most lenders want to see a DTI of 36% or lower, though some approve borrowers with a DTI up to 43% or 50% with strong credit.

2. Determine Your Loan Type

Here's what a typical personal loan looks like today.

• Loan amounts: Most lenders offer $1,000 to $50,000, with some going up to $100,000 for strong credit profiles.

• Annual percentage rate (APR) range: As of the second quarter of 2026, personal loan annual percentage rates (APRs) range from about 7% to 36%, based on your credit score and lender.

• Repayment terms: Terms usually last two to seven years, with 36 and 60 months being the most common.

• Average balance: The average unsecured personal loan balance in the U.S. sits around $11,700, according to recent TransUnion data.

Many types of personal loans exist, so first decide which type you need.

Secured vs. Unsecured

Loans come in two forms: secured and unsecured. Secured loans require you to put up collateral, such as a home or car, so that if you don't repay the loan, the lender can recoup the money by selling the collateral. Auto and mortgage loans are almost always secured loans.

An unsecured loan doesn't require collateral, which means that if you don't pay the loan, the lender can't access your property to get the money back. In general, student, personal and credit card loans are unsecured. There are still consequences for not paying an unsecured loan, including negative marks on your credit report, which can affect your ability to get financing in the future.

What Do You Need a Loan For?

When you apply, the application will ask how you intend to spend the money. That's because the terms of a loan will often have rules about what you can use the money for. The different types of loans include:

• Auto loans: Designed for buying new or used vehicles.

• Personal loans: These can be used for credit card debt consolidation or to fund big purchases. Some lenders will not allow you to use personal loans to buy a car or pay for education.

• Small business loans: If you're an entrepreneur and you want to know how to get a business loan, look into a small business loan for capital.

• Student education loans: You can get federal student loans or private student loans to help with higher-education costs.

• Mortgage loans: Home loans enable consumers to buy homes and pay them off over a number of years.

3. Find the Right Lender: Banks vs. Credit Unions vs. Online Lenders 

Each type of lender has trade-offs. Here's how they stack up.

• Banks: Best for borrowers with strong credit scores of 700 or higher. Funding can take three to seven business days. Rates are competitive if you already have a relationship with the bank.

• Credit unions: Often the most flexible on credit requirements, with some approving scores in the low 600s. Rates are capped at 18% by federal law for federal credit unions. Funding usually takes one to seven business days.

• Online lenders: Fastest option, with many funding loans the same day or within one to three business days. Credit requirements vary widely, and some lenders work with scores as low as 580. Rates can be higher for lower credit tiers.

Choosing the right lender means finding the one that best fits your specific situation. For example, if you're a member of a credit union, it's smart to check your options there first. Credit unions are nonprofit organizations and typically offer members lower loan rates. If you're not a credit union member but want to keep things local, you might choose a community bank loan over a national bank loan.

You can even get a personal loan online today. Many companies offer quick, easy, online applications with short waiting periods. Peer-to-peer lending sites are another option — you don't have to use a financial institution with these types of loans. Instead, borrowers are matched with individual lenders. If you're buying a car, you'll usually want to choose a direct loan over a dealership loan; dealer loans are best for bad credit loans.

👉 Best Personal Loans

4. Prequalify and Compare Loan Rates and Terms

According to Federal Reserve data from May 2026, the average APR on a 24-month personal loan is 11.86%. TransUnion reported that unsecured personal loan balances in the U.S. hit a record $276 billion in late 2025, showing steady demand across credit tiers.

With excellent credit, you should be able to get great rates and terms on anything you need. Although it's still possible to get a loan if your credit is fair or bad, it can be more difficult to get approved and the rates will be higher.

Shop around for the type of loan you need and compare your options. Research lenders thoroughly before you apply for a loan. When you're doing your research, consider:

• How much you are borrowing: Don't try to borrow more than you can pay back. Use a loan calculator to figure out how much you'd be likely to get. Knowing how much of a loan you'll qualify for can be helpful when you're talking to lenders.

• The loan's term length: For some types of loans, opting for a longer repayment period may lower your monthly payments. Remember that a longer-term loan will likely mean you'll pay more interest over the life of the loan.

• Interest rate: The annual percentage rate is the key to the total cost of your loan. Even though differences in rates might be measured in tenths or hundreds of a percent, with a high APR, you'll wind up paying more interest over the long term and have higher monthly payments.

What Is an Origination Fee?

An origination fee is a one-time charge the lender takes for processing your loan. It usually runs 1% to 10% of the loan amount and is often deducted from your loan before the funds hit your bank account.

Here's what that looks like in practice. If you borrow $10,000 with a 5% origination fee, you'll receive $9,500 — but you still owe interest on the full $10,000.

5. Apply for Loans Selectively

Although you can apply for several loans at once, doing so could negatively impact your credit score. Whenever you apply for a loan, the company conducts a credit check on you, which means they take a look at your credit report to see if you're a reliable borrower. When a company does this, it's called a hard inquiry, which shows up on your report as evidence that the company is deciding whether to lend you money.

Hard inquiries can ding your credit report and lower your credit score. Too many hard inquiries on your report can look like you're scrambling around for money, which is the last thing a lender wants to see.

Soft Credit Check vs. Hard Credit Inquiry

Not every credit check hurts your score. Knowing the difference helps you shop smart.

• Soft credit check: Used during prequalification to preview your rate. It does not affect your credit score and only you can see it on your report.

• Hard credit inquiry: Happens when you submit a full loan application. It usually lowers your score by fewer than five points and stays on your credit report for two years, though it stops affecting your FICO score after about a year.

Tools That Can Help You Get a Personal Loan

A few free tools can speed up the process and help you avoid surprises before you apply.

• Debt-to-income calculator: Shows the share of your monthly income that already goes to debt. Most lenders want this number under 36%.

• Prequalification tool: Gives you an estimated rate and loan amount with a soft credit check, so your credit score is not affected.

• Loan payment calculator: Shows your monthly payment and total interest based on the loan amount, rate and term you enter.

• Credit score tracker: Lets you check your score before you apply so you know which lenders you qualify with.

Documents You Need To Apply for a Personal Loan

Have these ready before you start the application to avoid delays.

• Government-issued photo ID such as a driver's license or passport

• Social Security number or Individual Taxpayer Identification Number

• Proof of income such as recent pay stubs, W-2s or tax returns

• Proof of address such as a utility bill or lease agreement

• Bank account and routing number for funding

• Employer name and contact information

How To Get a Loan FAQs

How long does it take to get a personal loan?

Online lenders often fund approved loans within one to three business days. Banks and credit unions can take three to seven business days.

Will applying for a personal loan hurt my credit?

A full application triggers a hard credit pull, which can drop your score by a few points for a short time. On-time payments after that can help your credit.

Can you get a personal loan with bad credit?

Yes, it’s possible to get a loan with bad credit. Some lenders approve scores as low as 580, but expect higher rates and lower loan amounts. Adding a co-signer can help.

How much can you borrow with a personal loan?

Most lenders offer $1,000 to $50,000. A few lenders go up to $100,000 for borrowers with strong credit and income.

What credit score do you need for a personal loan?

You can qualify with a score as low as 580 with some lenders. To get the lowest APR, aim for a score of 720 or higher.

What documents do I need to apply for a personal loan?

You need a photo ID, your Social Security number, proof of income such as pay stubs or tax returns, proof of address and your bank account details for funding.

Does prequalifying for a personal loan guarantee approval?

No. Prequalification gives you an estimated rate based on a soft credit check, but final approval depends on a full application and hard credit pull.

Key Terms

• Personal loan: A lump sum you borrow and repay in fixed monthly payments, usually over one to seven years.

• Secured loan: A loan backed by collateral like a car or home the lender can claim if you don't repay.

• Unsecured loan: A loan with no collateral, approved mainly on your credit and income.

• Debt-to-income ratio (DTI): The share of your monthly income that goes to debt payments; lenders usually want it under 36%.

• Soft credit check: A rate preview during prequalification that doesn't affect your score.

• Hard inquiry: A full-application credit pull that can lower your score by a few points and stays on your report for two years.

• Origination fee: A one-time charge, often 1% to 10% of the loan, usually deducted before funds arrive.

• APR: The yearly cost of the loan, including interest and certain fees.

Sources

• Federal Reserve: Consumer Credit (G.19) 

• FICO: Score Credit Insights Report (Spring 2026) 

• CFPB: What is a debt-to-income ratio? 

• AnnualCreditReport.com 

Summary generated by AI, verified by MoneyLion editors

Emily Gadd, CCC™, contributed to editing this article.

Photo credit: Pekic / Getty Images