From application to approval: find out how long it takes to get a personal loan

You don’t have to wait until your buddy gets home before you can call him. You don’t have to wait more than a day (maybe two) for that shampoo you ordered on Amazon. You might even have an app that gives you access to your wages a day before payday.

In a world where instant gratification is the name of the game, timing matters. Delays push off your financial goals. Let’s take a look at how long it takes to get a personal loan and what you can do to expedite the process.

How to get ready to apply for a personal loan 

When you apply for a personal loan, the lender will look at details such as your: 

• Credit score (most lenders have a minimum that you’ll have to meet)

• Credit history (certain things, like open collection accounts, could be deal-breakers)

• Debt-to-income ratio (this is the percentage of your income that you spend on debts and housing each month)

• Collateral, if you are applying for a secured loan (an item of value that you offer to the lender as a guarantee that you’ll repay the loan). Note that most personal loans are unsecured loans and don’t require any collateral.

Check your credit

A good rule of thumb is to check your credit history and score before you apply, so that you’ll already know what the lender will see when they check your credit. You can order a free credit report from AnnualCreditReport.com. There are many sources for free credit scores. Check with your bank or credit card issuer first, or a free credit score website. 

What do you do once you check your credit? First, make sure there are no errors. Some errors are harmless, but others can knock points off your score. You can dispute inaccuracies while you’re viewing your credit report online. 

Next, clean up anything that could get your loan application rejected. For instance, if you have any unpaid collection accounts, you probably need to pay them off before you can be approved for a loan. 

Your credit score is a tool lenders use to determine whether you qualify and for what interest rate. They usually divide credit scores into categories or tiers. The highest tier gets the lowest interest rate. If your credit score is on the cusp of the next higher tier, you might want to consider taking steps to improve your score before you apply so that you can save money over the life of the loan. Ask the lender what credit score would be needed to qualify for a lower interest rate.

Gather your documents

While each lender has different requirements, they’ll all ask for similar details: 

• Personal information (home address, phone number, date of birth, email, citizenship status, Social Security number) 

• Employment and income information (employment status, employer name, phone number, gross monthly income, monthly housing payment)

• Personal loan information (why you want the loan, how much you want to borrow, and the length of the repayment term that you prefer) 

• Additional documents as needed (recent pay stubs, utility bills, copy of government-issued ID, recent tax returns) 

Get pre-approved 

Some lenders offer personal loan pre-approval, which gives you an idea of the loan amount and rate you’ll qualify for, so get started by talking to a loan consultant. It's best to only inquire with lenders that offer pre-approval with a soft credit check, which won't harm your credit. Then you can compare offers side-by-side.

Once you've made a decision, submit only one application for a loan. That’s because every formal loan application you make can knock a few points off your credit score, so it’s best not to apply until you’re fairly certain that you’ll qualify.

The personal loan approval process 

Every lender's process for reviewing and approving your application is slightly different. But for the most part, the way personal loans work is pretty straightforward. Here's what you can expect after you submit your information, upload your documents, and hit "submit": 

• The lender will review your application and do a hard credit check (this could cause your credit score to drop by a few points)

• The lender will look over your financial picture, employment information, and the reason you want the loan.

• If approved (congrats!), you'll receive a formal offer with the loan amount, rates, terms, and monthly payment amount.

• Once you accept the offer, the lender will release the funds. If you’re opting to have the lender directly pay off other debts, the money will go straight to those creditors. Otherwise, most borrowers get the money deposited directly into their checking account.

The process might go faster if you got pre-approved for the loan—because you will already have had a chance to find out what details and documents the lender wants.

The time frame for funding

If you are well-prepared when you apply, you might get same-day approval and the money as soon as the next business day. If the lender has questions or needs more time, the process can take a few days. Most approved personal loans are funded within five to seven business days. 

Tips for speeding up the personal loan process 

You can do a lot to maximize your odds of loan approval and minimize the amount of time you have to wait for the loan funds. Here are some steps you can take to speed up the process and get your money sooner: 

Check your credit before you apply. Know where you're at, credit-wise, before you submit an application. Also, if your credit file is frozen (inaccessible to new loan applications) you’ll want to unfreeze it before you apply. Otherwise, the lender will ask you to do so and might send your application back to the end of the line.

Get pre-approved. You’ll already know what information the lender needs, and you might already have an account set up on their website. If your pre-approval didn’t involve uploading documents, you’ll still need to do that.

Be prepared. You can speed up the process by having all of the necessary information in front of you when you apply. 

Go with an online lender. Online lenders may have more advanced technology in place, which can help speed up approval. They may have an easier, more simplified application process. Also, you won't need to make a trip to a physical location, which saves you time.