Key Takeaways
- Securing a personal loan requires a combination of stable employment, steady income, and good credit.
- Finding the best deal likely involves shopping your rate with multiple lenders like you would for a mortgage.
- Personal loans are typically unsecured, allowing for higher approval speeds.
As a rule, easy-to-get loans are expensive. And inexpensive loans take a lot of time, money, and effort before you secure your funds.
But personal loans serve as an exception: one that’s affordable yet quick and light on admin. Read on to discover how to get a personal loan that’s easy on your pocket and your time.
In this article (Skip to...)
- Personal loans — the Goldilocks borrowing option
- How to get a personal loan quickly
- Know your credit score
- Crunch the numbers
- Shop multiple lenders
- Understand and verify lenders
- Accept the loan and start making payments
- FAQ
- Additional resources
Personal loans — the Goldilocks borrowing option
Personal loans are the Goldilocks lending alternative: not too costly, not too slow, not too big of an administrative headache — just right. Your credit score will greatly determine your annual percentage rate (APR), with higher scores qualifying for lower rates and vice versa.
Many lenders of personal loans promise to give you a decision quickly and have your money in your bank account by the next working day. But if you want to know how to get a personal loan that’s the best deal possible, you might want to allow yourself an extra day or two for comparison shopping and follow the typical steps.
See if you qualify for a personal loan. Start here
How to get a personal loan quickly
Getting your ducks in a row before you start applying will save you time. All that involves is preparing the information every lender is likely to request.
Lenders will almost certainly ask about certain outgoings. So make a list of your other debts and how much you have to pay on them each month: auto loan, student loan, minimum card payments and so on. You’ll also probably have to declare any alimony or child support obligations you have.
You should also be ready to prove your claims. The more you’re borrowing, the more documentary evidence a lender’s likely to require in support of your application. It might also demand a pile of paperwork if it suspects you’ve lied on your paper or onscreen form.
But even if neither of those is an issue, as a minimum, expect to have to upload, email or mail copies of recent documents that prove:
- Who you are — drivers license, state ID, social security card, passport or similar
- Where you live — current utility bills in your name or documentation for your lease or mortgage
- How much you earn — bank statements, pay stubs or IRS paperwork
Having the documents ready before you apply can dramatically reduce the time it takes for your money to arrive in your bank account.
1. Know your credit score
Whether you’re applying for a mortgage, credit card or personal loan, interest rates highly depend on your credit score. It’s the single most important factor in determining how high or low an interest rate you’ll pay — and whether you’ll be approved at all.
That’s because lenders use your credit score to estimate a loan’s repayment risk. Higher credit scores mean better underwriting terms, and can equate to potentially thousands saved in interest over the life of the loan. And there are measures you can take to raise your credit score fast.
But if you’re ready to apply or shop for rates, don’t worry about this process harming your credit score. When asking for just a quote, most lenders run a “soft” credit inquiry and that isn’t reported. Only formal applications with your chosen lender will your score take a small, inevitable hit. And that impact should quickly disappear as you make on-time payments. In fact, your new loan might make your score higher within a few months.
Many borrowers find out their credit scores before making any application. The more accurate you are when you estimate your score, the more accurate your rate quotes are likely to be.
Raising your credit profile
Higher credit scores will often lead to better loan offers and lower interest rates.
While it can take years to build excellent credit, you can raise your score quickly with these 10 credit insights:
- Get your free credit score
- Dispute any errors
- Make on-time payments
- Pay down debt
- Become an authorized user
- Consider a rapid rescore
- Never carry a credit card balance
- Improve your debt-to-income ratio
- Avoid closing open bank and credit accounts
- Don’t open new credit cards or loans
Read our full guide here.
Explore your personal loan options. Start here
2. Run the numbers
Before applying, figure out how big of a loan you need and how much you can afford as a monthly payment. With a personal loan, you receive the total approved funding amount upfront and pay it back in fixed installments every month.
You should also account for origination fees up to 12% of what you borrowed. Generally, the origination fees get subtracted from your total loan amount, so consider that when determining how much to borrow.
The example below shows the impact of APR and fees on a $20,000 personal loan with a five-year term:
| Approved loan amount | APR | Origination fee | Received loan amount | Monthly payment | Total interest paid |
| $20,000 | 9% | 0% | $20,000 | $416 | $4,911 |
| $20,000 | 15% | 5% ($1,000) | $19,000 | $476 | $8,548 |
| $20,000 | 25% | 8% ($1,600) | $18,400 | $588 | $15,222 |
3. Shop multiple lenders
Just like with mortgages, interest rates for personal loans can vary drastically by lender and from one day to the next. Forgoing any comparative shopping for your rate can potentially cost you hundreds, if not thousands of dollars in loan interest.
Getting multiple rate quotes gives you negotiating leverage into finding the best loan terms.
Applying with your current bank or credit union could possibly bring you the best deal, and may even come with financial perks, but you’ll never know what else is out there if you don’t compare personal loan offers from other sources, too.
Tip: Shopping around saves you money
Shopping for lenders gives the borrower both options and a base for negotiating better terms on their personal loan.
Research from Freddie Mac showed that borrowers who got quotes from just two lenders reduced their mortgage rate by an average of 10 basis points (0.1%). That can potentially save you hundreds or even thousands annually.
4. Understand and verify loan terms
Once you done your comparative interest rate shopping and decided on which lender to use, it’s time to submit the formal loan application. This starts the verification process, which usually involves a hard credit pull.
You’ll receive your official loan terms upon approval. These should always be read and reviewed with care before signing. Double-checking your monthly payments, timeline and interest costs won’t hurt either, just to make extra sure you can afford the loan.
Explore your personal loan options. Start here
5. Accept the loan and start making payments
Once your lender approves your personal loan application and you sign the contract, you should receive your funds quickly. Many personal loan lenders get you your money via direct deposit within one business day or about a week for a physical check.
Be sure to know when your monthly payments are due and make them on time to avoid penalty. Setting up your personal loan for autopay can help and some lenders offer discounts if you use it.
The bottom line
Things can move quickly once you start requesting personal loan quotes. Getting your documentation ready and figuring out your credit score can give you a better idea of how much you may be approved for and what it’ll cost.
Comparing multiple lenders and their terms increases your likelihood of getting a better deal — and one that will save you money over time.
Once you have your loan funding, you can use it for any purpose, but you’ll have to pay it back with interest.
Time to make a move? Let us find the right mortgage for you
FAQ: How to get a personal loan
A personal loan allows you to borrow money with terms of up to seven years, and you pay it back in equal installments, usually monthly. Like with mortgages, borrowers with higher credit scores and incomes typically qualify for the lowest interest rates and largest lending amounts.
Documentation will vary by lender, but you should generally expect to provide documents proving your income (pay stubs, bank statements, W-2s, retirement funds, etc) and official identification (government-issued ID, utility bills, mortgage/lease agreement, etc.)
Broadly, personal loans don't have restrictions on what you can use the funds for, but individual lenders may set some parameters. Generally, borrowers will use personal loans for debt consolidation, emergency costs (like an unforeseen medical bill), home improvement, or big life events (like a wedding).
Banks, credit unions, and online lenders are common personal loan lenders. However, each will potentially have different terms, requirements, and fees — making it especially important to research, weigh your options, and do the math to double-check if a loan is affordable before committing.
Additional resources
Looking for more information? We’ve created additional articles that explore personal loans. Check out the resources below for deeper information and related coverage.
How a Personal Loan Affects DTI and Mortgage Approval
How to Use a Personal Loan for Home Improvement
Financing a Tiny Home With a Personal Loan
Does it Make Financial Sense to Get a Personal Loan for Medical Bills?
HELOC vs Personal Loan When Interest Rates are High
Credit Card or Personal Loan: Which is Better to Cover an Expense?
