Whether you’re consolidating debt, funding home improvements, or covering unexpected expenses, understanding how to get a personal loan can save you time and money. Today’s borrowers have more options than ever for applying for a personal loan – from traditional banks to online lenders and credit unions. We’ll walk you through everything you need to know about how to get a loan with some of the best possible terms for your situation.
PRO TIP! Unsure if you would qualify for a loan? Check your likelihood of getting a loan offer from one of MoneyLion’s partners.
Table of contents
How to get a loan in 7 steps
Getting a loan doesn’t have to mean drowning in paperwork or endless bank visits. Follow these 7 steps on how to get a personal loan to streamline your path from application to approval.
Step 1: Check your credit score
Before applying for a personal loan, you’ll want to pull your free credit report from AnnualCreditReport.com. Your credit score isn’t just a number, it’s your ticket to better terms and potentially lower interest rates.
- Excellent credit (740+): You could qualify for the lower rates and better terms, with some lenders offering APRs as low as 6 to 8%.
- Good credit (660-739): Many lenders will be willing to work with you, though your rates may be slightly higher than those offered to excellent credit borrowers.
- Fair credit (580-659): Some online lenders will approve you, but expect higher interest rates and may need to shop around more extensively.
Take the time to review your credit report and check for any errors. If you find any inaccurate information, you’ll need to dispute it to correct it.
Learn More: How to Dispute Your Credit Report and Win
Depending on how urgently you’re looking to get a loan, it could be worth waiting a few months and working towards improving your credit score, since doing so could potentially save you thousands in interest over the life of your loan.
Learn More: How to Raise Your Credit Score by 200 Points
Step 2: Estimate your target personal loan amount
Before getting a loan, take time to crunch the numbers and estimate how much you’ll need – not just what you want to borrow.
Tally up your exact project costs for home renovations, get firm quotes for that car purchase, or calculate your total credit card balances for debt consolidation. Then add a small buffer (around 5-10%) for unexpected expenses and additional fees.
💡For example, if you’re renovating your kitchen and contractors quote $15,000, consider borrowing $16,500 to cover potential surprises like permit fees or material price changes. But resist the temptation to borrow extra “just in case”. Remember, you’ll pay interest on every dollar you borrow, whether you use it or not, so don’t borrow more than necessary.
Learn More: The Ultimate Guide on Everything to Know About Personal Loans
Step 3: Estimate your loan payment
Use a personal loan calculator, such as the one below, to find a monthly payment that won’t strain your budget. A good rule of thumb: your total monthly debt payments (including this loan) shouldn’t exceed 40% of your take-home pay.
Before you start using the personal loan calculator, check the table below for an estimate on what Annual Percentage Rate (APR) you could qualify for based on your credit score:
| Credit score range | Typical interest rate range |
| Excellent (740+) | 6% – 12% APR |
| Good (670-739) | 13% – 18% APR |
| Fair (580-669) | 19% – 25% APR |
| Poor (below 580) | 26% – 36% APR |
Learn More: What is APR?
Step 4: Get pre-approved or use a loan marketplace
Smart borrowers know that getting a loan is like negotiating a salary – you never accept the first offer.
The traditional way of applying for a personal loan meant requesting pre-approval from multiple lenders – banks, credit unions, and online lenders – one at a time. Each required a separate application and took time to process, making shopping and comparing personal loan offers a timely process.
Modern loan marketplaces, like those available through MoneyLion, have largely simplified this process. Taking a few minutes to sign up can get you pre-qualified offers from multiple lenders, with no impact on your credit score.
Step 5: Compare personal loan offers
Once you have multiple pre-qualified offers, it’s time to compare them side-by-side. Modern loan marketplaces make this easy by displaying each personal loan offer’s key details in a clear, comparable format.
You’ll see essential factors like APR, monthly payments, loan terms, and any fees laid out for easy comparison. Think of it as a financial menu where you can quickly spot which lender is offering the best overall package for your needs.
Compare rates, terms, and fees from personal loan offers side by side, and easily choose the best deal for you.
Step 6: Submit your full application
After selecting your best offer, you’ll move from pre-qualification to a lender’s formal personal loan application. Be ready to provide more detailed documentation like recent pay stubs, tax returns, or bank statements.
The lender will perform a hard credit check at this stage, which temporarily impacts your credit score. Most online lenders make decisions within 1 to 2 business days, though traditional banks might take longer.
Step 7: Accept your loan and get funding
The final step of getting a personal loan is reviewing and accepting your official loan agreement. Pay special attention to the APR, payment schedule, and any fees – they should match your pre-qualified offer.
Once you sign, many online lenders can deposit funds into your bank account within 24 to 48 hours. Mark your first payment date in your calendar, and consider setting up automatic payments to avoid any late fees.
Where to get a personal loan
Today’s borrowers have more options than ever for getting a personal loan. Traditional banks often offer competitive rates to existing customers but might have stricter requirements and longer processing times.
Online lenders shine when you need quick funding, often depositing money within 24 to 48 hours of approval. And personal loan marketplaces let you compare multiple offers at once, making it easier to find your best rate.
Here’s a quick look at typical qualifying requirements:
- Banks or credit unions: Credit scores 680+, established credit history, prefer existing customers or members
- Online lenders: Credit scores 580 to 700+, quick approval, higher rates for lower scores
- Loan marketplaces: Various requirements since they work with multiple online lenders
Common requirements to get a personal loan
Beyond your credit score, lenders look at several key factors when reviewing your personal loan application. You’ll typically need:
Steady income: Most lenders want to see regular income that could be 2 to 3 times your monthly payment. They’ll usually ask for recent pay stubs or tax returns.
Decent debt-to-income ratio: Your monthly debt payments (including the new loan) should be less than 40% of your monthly income. Lower is better for approval odds.
Valid ID and documentation: You’ll need government-issued ID, proof of address (utility bills or lease agreement), and recent bank statements.
Age and citizenship status: You must be at least 18 years old and either a U.S. citizen or permanent resident. Some lenders work with non-citizens who have valid long-term visas.
Active bank account: You’ll need a banking or checking account for the loan deposit and ongoing payments. Some lenders prefer if you’ve had this account for at least a few months.
💡Pro tip: Having these documents ready before you apply can speed up the approval process and help you get funded faster.
How to Take Out a Personal Loan: Your Next Steps
Taking out a personal loan has become more streamlined than ever, but success lies in the preparation. Before you start applying, check your credit score, calculate your ideal loan amount, and gather your documentation. Use loan marketplaces to compare multiple offers at once, and don’t forget to check with your local credit union or bank for competitive rates.
Remember, the best loan isn’t just about the lowest rate – it’s about finding terms that fit your budget and timeline.
FAQs
What do I need to get a loan?
To qualify for a personal loan, you’ll typically need a credit score of at least 580 to 660, a steady income, a valid ID, proof of address, and an active bank account. Your debt-to-income ratio should be under 40%.
What’s the best way to get a personal loan?
The most efficient way to get approved for a personal loan is to check your credit score first, then use a loan marketplace to compare pre-qualified offers from multiple lenders at once. This approach saves time and helps you choose the offer with the best rates without multiple hard credit checks.
How to get a personal loan from a bank?
To get a loan from a bank, start by checking if your existing bank offers relationship discounts, then gather your pay stubs, tax returns, and bank statements before applying. Existing customers often get faster approval and opportunities to get better rates, though banks typically have stricter credit requirements (usually a 680+ credit score) than online lenders.
