How To Get a Personal Loan: Your Step-by-Step Guide

A personal loan is a fixed-amount installment loan repaid through monthly payments over a set term. Personal loans can be used for a variety of expenses and often come with lower interest rates than credit cards. Before applying, it helps to understand how approval works, what lenders look for and how to compare loan offers.

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Key Takeaways

• Getting a personal loan starts with knowing how much you need and where your credit stands. Most lenders look for credit scores between 580 and 670 or higher, and borrowing only what you need helps keep interest and fee costs manageable.

• Comparing lenders and prequalifying with multiple options is one of the most important steps in the process. Prequalification uses a soft credit pull that does not affect your score and lets you compare rates, fees and repayment terms side by side before committing.

• Personal loans come in several forms, including secured, unsecured, fixed-rate and debt consolidation loans. The right type depends on your credit profile, how you plan to use the funds and whether you are comfortable putting up collateral.

• Most approved personal loans are funded within one to five business days. Setting up autopay or payment reminders after funding can help you avoid late fees and protect your credit score throughout repayment.

Summary generated by AI, verified by MoneyLion editors

1. Determine How Much You Need To Borrow

Borrowing too little could prevent you from covering the expense you're borrowing money to pay, but too large a loan will cost you unnecessary interest and fees.

• Look at the reason for your loan, whether it's to consolidate debt, pay medical expenses, finance home improvements or get you through an emergency.

• Then calculate how much you'll need to meet your goal.

2. Check Your Credit Score

Your credit score impacts your ability to get a loan and how much you'll pay for it. Most lenders look for credit scores between 580 and 670 or higher, depending on the loan type and lender.

To maximize your credit score before you apply, you can do the following:

• Review copies of all three credit reports — Experian, Equifax and TransUnion.

• Look for errors and forgotten collection accounts.

• Dispute any inaccuracies and take care of any old debts that could affect your score.

• Once your credit reports are in good shape, request your credit score from FICO so you know where you stand before you apply.

3. Compare Lenders and Loan Terms

The next step is to research lenders, including banks, credit unions and online lenders, to see which one is the best match for you. Make note of the lenders' annual percentage rates (APRs), fees, loan terms and eligibility requirements.

Here's a comparison of some top lenders:

4. Get Prequalified for the Loan

Many lenders allow you to prequalify for a loan by providing some basic information about yourself, your income and your credit.

• Most prequalification requests won't impact your credit.

• It will get you an estimate of the rate and origination fees you can expect to pay.

• If you request prequalification from several lenders, you can also compare the loans to find the one with the best combination of rates, fees and available terms.

5. Gather Required Documents

Once you've selected the best loan, you'll have to fill out an application. The lender will verify the information you provided in your prequalification request by pulling your credit report and reviewing your financial documents, which you should have ready before applying.

Here's what you may need:

• Recent pay stubs

• Tax returns

• Bank statements or other sources of income

• Benefits statements

• Employment verification

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

6. Submit Your Loan Application

You can submit your loan application in person if you're using a local lender. Otherwise, apply online or by phone.

Loan processing could be delayed while you work with the lender to correct mistakes or add missing information, so be sure to double-check your application details.

7. Review Loan Terms and Accept the Offer

Review your loan documents carefully before accepting the offer.

• Check origination and other fees, the interest rate, payment amount and repayment period.

• Also, note whether you'll have to pay a penalty if you want to pay the loan off early.

If everything looks good, sign the loan documents to accept the loan. Otherwise, consider negotiating with the lender or applying for a loan with a different lender.

8. Receive Funds and Start Repayment

Most approved personal loans are funded within one to five business days.

Make note of the due date for your first payment. It could be 30 days after finalizing the loan or 30 days after you received the funds.

Setting up autopay or payment reminders will help you avoid overdue payments and late fees.

Types of Personal Loans

Several different types of personal loans are available. Here's a side-by-side look at a few:

Secured Personal Loans

• Secured personal loans require collateral such as a car, savings account or even cabinets and other permanent fixtures in your home.

• They're often geared toward borrowers with limited or damaged credit.

• While savings-secured loans may offer lower interest rates because the lender can recover funds directly from your account if you default, other secured loans, like car title loans, often come with higher rates and fees.

Unsecured Personal Loans

• An unsecured personal loan doesn't require collateral. Instead, the lender bases its approval on the strength of your credit, income and debt-to-income (DTI) ratio.

• Rates are usually higher than loans secured by savings accounts, but you won't have to risk your account or personal property.

Fixed-Rate Personal Loans

• Most personal loans have fixed rates. That is, the rate and payment stay the same for the entire loan term.

• Fixed rates can make budgeting easier over the life of the loan.

Variable-Rate Personal Loans

• Variable-rate personal loans start with a fixed rate for a set period.

• After that, the rate and the payment can increase or decrease periodically, based on the benchmark rate.

• Variable-rate personal loans are not the most common type and only a few lenders offer them.

Debt Consolidation Loans

• Although any personal loan can be used to pay off credit cards or other high-interest-rate debt, some lenders specifically market their loans as debt consolidation loans.

• Debt consolidation might be beneficial if your loan rate is lower than your credit card rates and you want to eliminate your debt with a single payment each month.

Secured vs. Unsecured Personal Loans

Here's a summary of how secured and unsecured loans compare.

Pros and Cons of Getting a Personal Loan

Consider the benefits and drawbacks of personal loans before you apply.

Tips for Getting Approved for a Personal Loan

• Improve your credit score: Pay your bills on time and avoid taking out new debt before applying.

• Reduce your DTI ratio: Pay down existing debt before submitting your application.

• Borrow only what you need: Choose a loan amount that fits your budget.

• Consider a co-signer: A co-signer may help strengthen your application if your credit is low.

Final Take

• Finding the right personal loan starts with understanding your budget, reviewing your credit, comparing lenders and gathering the right documents before applying.

• Taking time to compare rates, fees and repayment terms can help you choose a loan that fits your financial goals and long-term budget.

FAQs

What credit score do I need for a personal loan?

The minimum credit score you'll need for a personal loan will vary by lender. Personal loans requiring collateral might have no credit requirements, while lenders offering unsecured loans at competitive rates might require a good-to-excellent score.

How long does it take to get approved?

Some lenders offer same-day approval if you apply before the cut-off time each day.

Can I get a personal loan with bad credit?

Yes, you can get a personal loan with bad credit, but you might need to take out a secured loan, which requires collateral.

What is the best place to get a personal loan?

The best place for one borrower isn't necessarily the best for another. A good way to select the best one for you is to research loans, request rate quotes from a few lenders that appear to be a good fit, and select the best one in terms of rates, fees and loan terms.

Do personal loans affect my credit score?

Yes, personal loans can affect your credit score. Making on-time payments can maintain a good score, but missed payments will hurt it.

Key Terms

• APR: The yearly cost of borrowing expressed as a percentage, including both interest and fees. Comparing APRs across lenders is one of the most reliable ways to evaluate the true cost of a loan.

• Prequalification: A preliminary step where a lender uses basic information and a soft credit check to provide estimated rate and term offers. It does not affect your credit score and allows you to compare multiple lenders before formally applying.

• DTI: The percentage of your gross monthly income that goes toward existing debt payments. Lenders use DTI alongside your credit score to assess your ability to repay a new loan.

• Origination fee: A one-time upfront charge some lenders deduct from your loan proceeds before funding. It should be factored into your total borrowing cost when comparing loan offers.

• Co-signer: A person who agrees to share legal responsibility for repaying a loan. Adding a co-signer with stronger credit can improve approval odds or help secure a lower interest rate for borrowers with limited or damaged credit.

Summary generated by AI, verified by MoneyLion editors

Sources

• Consumer Financial Protection Bureau. 2023. "What is a debt-to-income ratio?"

• Consumer Financial Protection Bureau. 2024. "What is a prepayment penalty?"

*Fixed rates from 8.74% APR to 35.49% APR. APR reflects the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi Platform personal loans are made either by SoFi Bank, N.A. or, Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of 11/03/25 and are subject to change without notice. Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 9.99% of your loan amount for Cross River Bank originated loans which will be deducted from any loan proceeds you receive and for SoFi Bank originated loans have an origination fee of 0%-7%, will be deducted from any loan proceeds you receive.

Data is accurate as of May 21, 2026, and is subject to change.