A personal loan is money you borrow in one lump sum and pay back through fixed monthly payments over a set number of 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.
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
What tools can help you get a personal loan? Start with these four: A free credit report from AnnualCreditReport.com, a DTI calculator, prequalification with a soft credit check and a loan calculator to size your payment.
Check your credit before anything else: Pull free weekly reports from Experian, Equifax and TransUnion, then fix any errors — your score is what separates a great rate from a costly one.
Know your DTI going in: Divide your monthly debt payments by your gross monthly income; most lenders want to see 36% or lower, though some approve up to 43% or 50% with strong credit.
Prequalify to preview rates safely: A soft credit check lets you compare offers without affecting your score, while the full application later triggers a hard inquiry that can dip it about five to 10 points.
Compare all three lender types: Banks suit strong credit (700+), federal credit unions cap rates at 18% by law and may approve scores in the low 600s, and online lenders are fastest — sometimes funding the same day.
Read the full cost, not just the rate: Factor in the APR (roughly 7% to 36%) and any origination fee of 1% to 10%, which is often pulled from your funds before they hit your account.
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.
Check your credit score to see where you stand.
Figure out how much you need to borrow and what you can afford to pay back.
Shop and compare lenders, including banks, credit unions and online lenders.
Prequalify with a soft credit check to preview rates without hurting your score.
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.
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: Rates run from about 7% to 36%, depending on your credit score, income and lender.
Repayment terms: Terms usually last two to seven years, with 36 and 60 months being the most common.
Average balance: The average personal loan balance in the U.S. sits around $11,000, based on recent credit bureau data from Experian and TransUnion.
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: This can be used for credit card debt consolidation or to fund big purchases. Some lenders will not allow you to use personal loans for buying a car or paying 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.
4. Prequalify and Compare Loan Rates and Terms
According to the latest data from the Federal Reserve, the average APR on a 24-month personal loan sits near 12% as of early 2026. TransUnion also reported that unsecured personal loan balances in the U.S. topped $250 billion last year, 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, if you opt for a longer repayment period, you might 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 pulled from your loan before the money hits 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 can lower your score by about five to 10 points and stays on your credit report for two years, though the score impact usually fades within a few months.
How To Get a Loan FAQs
How long does it take to get a personal loan?
Funding times vary by lender. Online lenders can deposit funds the same day or within one to three business days. Banks and credit unions usually take three to seven business days.
Does prequalifying for a personal loan hurt your credit?
No. Prequalifying uses a soft credit check, which does not affect your credit score. A hard inquiry happens only after you submit a full application.
Can you get a personal loan with bad credit?
Yes, but your options may be limited. Some lenders work with credit scores as low as 580, though you'll likely pay a higher annual percentage rate (APR) — often near the 36% cap. Adding a co-signer or choosing a secured loan can improve your odds.
How much can you borrow with a personal loan?
Most lenders offer $1,000 to $50,000. Borrowers with strong credit and high income may qualify for up to $100,000.
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.
Key Terms
Personal loan: Money borrowed in one lump sum and repaid in fixed monthly payments over a set term, usually two to seven years. Most are unsecured, so no collateral is required.
Credit report: Your record of how you've handled debt, available free each week from all three bureaus at AnnualCreditReport.com — the first tool to check before applying.
Debt-to-income ratio (DTI): The share of your gross monthly income that goes to debt payments. Lenders generally want 36% or lower, and a DTI calculator helps you find yours before you apply.
Prequalification: A preview of the rate you might get, run through a soft credit check that doesn't affect your score — one of the most useful shopping tools.
Soft credit check: A credit review used in prequalification that only you can see and that doesn't lower your score.
Hard inquiry: The credit pull triggered by a full application. It can lower your score about five to 10 points and stays on your report for two years, though the impact usually fades within months.
Secured vs. unsecured loan: A secured loan requires collateral like a car or home; an unsecured loan doesn't, but defaulting still carries serious credit consequences.
Origination fee: A one-time charge of 1% to 10% of the loan, often deducted before you receive the funds. Borrow $10,000 with a 5% fee and you get $9,500 but owe interest on the full $10,000.
Sources
FRED: Finance Rate on Personal Loans at Commercial Banks, 24-Month Loan
CFPB: What's the difference between a hard and soft credit inquiry?
Emily Gadd, CCC™, contributed to editing this article.
Photo credit: Pekic / Getty Images
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