Innovations in the loan application and approval process have made it easier and faster than ever to get a decision on your loan, sometimes even within minutes. A fast approval can be helpful if you need funds fast. But don’t speed through the loan details. Research and compare lenders before you apply to make sure you get the best loan deal possible.
What Is the Personal Loan Approval Process?
The personal loan approval process starts once you fill out an application. This gives the lender enough information to check your creditworthiness. You may apply online or in person, and some lenders offer applications by phone as well.
If you’d rather apply in person, you can visit a bank or a credit union.
When you meet with a lender, “You can be more or less prompted through the process,” says Mike Schenk, deputy chief advocacy officer and chief economist for the Credit Union National Association. “A lot of people don’t like to read the details on forms (themselves). To have someone help you understand that process and what the forms mean, it can be helpful in some cases.”
[Read: Best Personal Loans.]
Before you apply, make sure you meet the lender’s basic requirements. For example, Discover requires that applicants be older than 18, be a U.S. citizen or permanent resident, and have a household income of at least $25,000, says Matt Lattman, vice president of personal loans at Discover.
“Like other lenders, we have additional credit and/or income requirements to approve you for a loan,” Lattman says.
Most personal loan terms are two to five years, and loan amounts range from $1,000 to $100,000. To determine whether you meet the lender’s specific credit and income requirements for the type of personal loan you’re pursuing, you’ll likely need to provide:
— Basic identification information. Your name, address and Social Security number allow the lender to look up your credit report and verify your identity. You might be asked for your driver’s license information as well.
— Proof of employment. A lender may ask for your employer’s contact information to confirm that you work there. You might also need to supply copies of pay stubs to verify the income you listed on the application.
Additionally, your credit history is a major factor in the underwriting of your loan. For example, if you have a debt that went to collections or if you filed for bankruptcy recently, it will be tougher to qualify.
Your credit scores from FICO and VantageScore are largely based on credit reports from the three major reporting bureaus — Equifax, Experian and TransUnion. A good FICO credit score starts at 670, but you have a chance to get approved with a score of 600 or above, depending on the lender and type of loan.
How Long Does the Loan Approval Process Take?
Once the lender reviews your personal information and credit history, you could get a decision quickly. But that doesn’t mean you’ll receive funds on the same day you applied. What to generally expect:
— Banks and credit unions. Expect to receive your funds in one to five business days when applying for a loan at either a bank or a credit union.
— Online lenders. Online banks tend to be the fastest when providing personal loan funds, with some issuing money within the same business day as application.
“The loan approval process can vary greatly based on the type of lender you choose and how much information you provide on your application, but generally you can be approved for a loan at a community bank within a day and, in some cases, within minutes or hours of submitting a completed application,” says Kathryn G. Underwood, president and CEO of Ledyard National Bank in Hanover, New Hampshire, and bank education chairman of the Independent Community Bankers of America.
Here is a look at the processes other lenders follow:
| Lender | Expected Time |
| Discover | Once your application is approved and you’ve accepted the terms of the loan, you can get funds as early as the next business day. |
| Prosper | The full personal loan process, from application to funding the loan, usually takes within five business days. |
| Upstart | Many loans are approved within minutes, and your funds can be transferred the next business day. |
| U.S. Bank | You can typically get a loan decision within a minute online and funds within one business day of loan closing. |
Once you fill out an application, most lenders offer a way to check the status of your loan online.
[CALCULATE: Use Our Free Personal Loan Calculator to Estimate Your Monthly Payments.]
How Can You Get a Personal Loan More Quickly?
— Make sure you’re doing your part. Incomplete or conflicting information on your application could delay or prevent your approval for a personal loan. “Inadequate documentation, discrepancies between the application and credit report, or loans requiring further review are common reasons why a loan decision could be delayed by several days or even weeks,” Underwood explains. But usually, you shouldn’t expect the delay to take more than a couple of business days, Lattman says.
— Be proactive. If you know you might have special circumstances that could disqualify you from getting a loan — such as no full-time job, a low credit score or a high debt-to-income ratio — you could set up a meeting with the lender to state your case.
— Provide additional documentation. If it’s a close call whether you’ll be approved for a loan, you should provide documents — such as several months of pay stubs that show a steady income — to address the lender’s potential concerns. “It shows the lender that you’re serious, you’ve thought it through and are the type of person who is more than likely to be attentive to that debt obligation,” Schenk says.
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How Long Does It Take to Get a Loan? originally appeared on usnews.com
Update 07/19/24: The story was previously published at an earlier date and has been updated with new information.
