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Sometimes life has a way of throwing curved balls. If you need quick cash to cover an unforeseen expense, you could turn to a personal loan.
Applying for and getting approved for a personal loan can be a pretty quick process, depending on certain factors and the lender you choose. While some loans can take weeks to fund, others only require a few days. Understanding the funding schedule of different lenders can help you plan your personal loan application.
Here’s an overview of the personal loan application process and how long it can take.
How long does it take to get a personal loan?
The time it takes for you to get a personal loan approved and receive your funds can vary from the same day or next business day to a week or more.
The location of your bank can also affect how quickly you receive your loan. Once your lender sends the funds, your bank will process and post the money in your account. Some banks do this fairly quickly, while others may add a few days to your disbursement period.
With Credible, you can compare personal loan rates from different lenders in just a few minutes.
Online lenders: Usually less than 5 days
If you are looking to get a personal loan quickly, an online lender might be the best option.
Online lenders are non-traditional banking institutions; they can operate entirely online or as a branch of a traditional banking institution. Many online lenders do not have physical branches, which saves them overhead and often allows them to offer competitive products and lower interest rates. But that usually means you can’t go to a local branch if you have a question or want to make a payment on your loan in person.
An online lender’s digital application process may be ideal for tech-savvy or on-the-go borrowers, but online lenders may not be suitable for those who prefer a paper or in-person loan application.
- It’s time to apply – The application usually takes a few minutes. You will need to provide personal information such as your address, driver’s license number, social security number, and proof of income.
- It’s time to get approved – Approvals can be instant in many cases, if no additional information is needed, or can only take a few hours.
- When the funds are disbursed – You can generally expect funding as early as the same business day or up to five business days from approval.
The time it will take you to receive a personal loan from an online lender depends on your application and financial details, when you apply, if additional information is required, and how quickly your bank processes the transfer.
For example, credible partners LightStream and OneMain Financial can fund loans as early as the business day you are approved. And if you’re approved before 4:30 p.m. Central on a weekday, Avant (also a credible partner) can fund your loan the next business day.
You can compare personal loan rates using Credible without affecting your credit score.
Banks and credit unions: 1 to 7 days
Traditional banks and credit unions offer personal loans to borrowers. These institutions often have physical branches, which can be ideal if you prefer to apply for or manage your account in person. Note that if you are applying for a loan from a credit union, you will need to be a member to be eligible.
You may be able to apply online, although some financial institutions may require you to apply in person at your local branch. After you submit your application, the bank or credit union will review your information – which usually includes reviewing your income and credit rating – before making a decision.
- It’s time to apply – The application process varies from institution to institution, so the time it will take to complete an application varies.
- It’s time to get approved – While some institutions may review your request in a day, some banks will take several days to review and approve the requests.
- When the funds are disbursed – Banks and credit unions may be able to fund your personal loan the same day you are approved, as is the case with lenders like Alliant Credit Union and Navy Federal Credit Union. However, depending on the institution you choose, it may take a business day or more.
If you already have a checking or savings account with a particular bank, it may be a good idea to apply for a loan from your bank first. Since he already knows you and your financial habits, it might be easier to get his approval.
You could also benefit from interest rate reductions or benefit from a faster application process. Banks like Wells Fargo, for example, release the funds as early as the next business day after approval.
Other ways to get a personal loan
Outside of online and traditional banks or credit unions, other places to search for a personal loan include non-traditional products like payday loans, pawn shops, or even auto title loans. But these types of loans should only be considered as a last resort.
These non-traditional loans are generally secured. You will need to provide an asset as collateral for the loan, such as your car, jewelry, or even a savings account.
But these types of loans will cost much more in the long run – thanks to high interest rates and potential fees – and can trap borrowers in a vicious cycle of debt. If you can avoid any of these products, do so at all costs.
Finance charges on payday loans can equal an annual percentage rate, or APR, of between 390% and 780%, which is a far cry from the APR ranges you are likely to find with a traditional personal loan. In addition to origination fees and other costs, auto title loans have an average monthly finance charge of 25% or more, which equates to an APR of 300%.
These loans also offer shorter repayment terms, often just a few weeks or months. If you are unable to pay off the debt on time, you will have to renew or renew your loan, which can lead to compound interest charges and additional fees.
Prepare in advance for faster approval
Preparing in advance before applying for a personal loan can help improve your chances of getting the loan and in a shorter timeframe.
Gather financial documents and identity documents
Lenders will usually ask you to provide certain financial information as part of the application process. Here are some documents to gather upstream:
- Recent payslips
- W-2 or 1099 from previous years
- Your last two tax returns
- Bank statements
Take a look at your credit score
It’s a good idea to know where your credit is before you apply for a personal loan. You can request a free credit report each year from the three major credit bureaus (Equifax, Experian, and TransUnion). You can also request a credit score from each, although the scoring model may differ from that used by your lender.
Carefully review your credit reports for any errors, such as accounts that don’t belong to you, late payments reported that were actually made on time, and erroneous account balances. If you find any errors, dispute them immediately with your creditor and the bureaus.
Shop around to find the best rates
The best way to find the most competitive interest rates – and potentially save you hundreds or thousands of dollars in interest – is to shop around with multiple lenders.
Platforms like Credible only ask you to enter your information once before performing a smooth credit check (it doesn’t hurt your credit score). You can then get pre-approved and check rates from multiple lenders at once, all in one place.
Credible makes it easy to compare personal loan rates.
Complete the request
Once you have an idea of which lender is best for you, it’s time to apply. This triggers a serious credit investigation, which will be reported on your credit and may temporarily lower your score by a few points.
Once you have applied, your lender will give you a loan decision and, if your application is approved, they can begin disbursing your loan funds.
Apply as early as possible
The sooner you apply for your personal loan, the sooner you can get approved and have funds on hand. Applying early in the morning, for example, can improve your chances of getting money deposited that same afternoon or the next day. If you apply later in the week, you might find yourself waiting until after the weekend to receive your funds.
Whether you are looking to cover a large expense or need cash quickly, personal loans can be a necessary financial product. By choosing your lender carefully, you can ensure that you find the best possible rate and the fastest payout time for your situation.