How Long it Takes to Get Approved for Personal Loans?

How Long It Takes at a Bank

Banks are one of the first places that people turn when they need a personal loan. Most banks offer other loans, like mortgages, home equity lines of credit, or car loans, so why not personal loans?

One of the main benefits of getting a personal loan from a bank is that you can always walk into a branch with any questions you may have.

Getting in-person service

Another benefit is that banks are capable of quick turnaround times, especially if you have need of the money now.

By walking into a branch and submitting your application in person, you’ll know it’s been received. From there, you’ll have to wait for the bank to approve the loan. Then, you’ll need to wait for the funds to become available to you.

So, how long does it take to get a loan approved at a bank? The answer is that it depends. Some banks have longer processes than others, but it should not take more than one or two business days.

Once your loan has been approved, you’ll need to wait for the funds to become available.

Some banks can make the funds available the same day, but others take longer.

Where you’re sending the money also affects this. If you’re applying for a loan from the bank you have your checking account at, it’ll be quicker.

From start to finish, the process can take a few days to a couple of weeks.

Decide How Much to Borrow

Remember that when you borrow money, you don’t just pay back the original loan. Except for that 0% card, paid off on time, you also pay interest or “rent” on the money you borrow. There’s no reason to pay interest on the money you don’t need, so only borrow what is necessary. On the other hand, if you borrow less than you need, you may be forced to turn to more expensive loan sources at the last minute.

Finally, make sure you can afford the payments on the amount you do borrow. There’s nothing worse than overextending yourself financially if the best thing would have been to wait awhile until your finances improve.

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Other ways to get a personal loan

Outside of online and traditional banks or credit unions, other places to look for a personal loan include non-traditional products, like payday loans, pawn shop loans or even car title loans. But these types of loans should only be considered as a last resort. 

These non-traditional loans are generally secured. You’ll be required to provide an asset as collateral on the loan, such as your car, jewelry or even a savings account.

But these types of loans will cost significantly 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 one of these products, do so at all costs.

Finance charges on payday loans can equate to an annual percentage rate, or APR, of anywhere from 390% to 780% — a far cry from the APR ranges you’re likely to find with a traditional personal loan. In addition to origination fees and other costs, car title loans have average monthly finance charges of 25% or higher, which equates to an APR of 300%.

These loans also offer shorter repayment terms, often just a few weeks or months. If you’re unable to pay off the debt in time, you’ll need to renew or roll over your loan, which can result in compounded interest charges and additional fees.

7. Do I have a good enough credit score?

Before you start applying for personal loans, it's important to know your credit score to make sure you can qualify. Most personal loan lenders are looking for applicants to have a good credit score, particularly online banks. However, if you have an existing relationship with a bank, you may get approved for a favorable deal if you have a good history of paying bills on time and honoring the terms of your past loans and accounts. 

Sometimes, credit unions will offer lower interest rates on personal loans and work with borrowers who have fair or average credit scores. But you often need to become a member and sometimes you need to open a savings account before you can qualify for a loan.

For people who don't have a great credit history, Upstart accepts applicants who have insufficient credit history or don't have a credit score at all. You will likely pay higher fees and interest rates than if you had a good credit score, so be sure to clearly read the terms and conditions before you sign on for the loan.

Application

How do I apply for a loan?

We recommend that you get started by checking your rates with no impact to your credit score. You can continue to apply when you’re ready. You may also: Make an appointment with a banker at your local Wells Fargo branch or find a location. Call us at 1-877-526-6332 . For most applications, you can track your application status online if you share your email address with us at the time of application. We’ll send you an email telling you how.

What information do I need to provide to apply for a loan?

To complete an application, please refer to the Application Checklist.

How much can I apply for and what loan terms are available? We offer personal loans ranging from $3,000 to $100,000. 12 – 36 months for personal loans ranging from $3,000 to $4,999. 12 – 84 months for personal loans ranging from $5,000 to $100,000.

Where to Obtain a Personal Loan

Personal loan sources are divided between two main categories: those with a banking license or charter and those without. The main distinction between the two categories involves regulation.

Non-Banking Financial Institutions (NBFIs)

Sources without a banking license are known as nonbanking financial institutions (NBFIs) or nonbanking financial companies (NBFCs). The main difference in terms of services is that NBFIs cannot accept deposits. NBFIs fall under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and are under the supervision of the CFPB.

NBFIs include online and brick-and-mortar finance companies, insurance companies, peer-to-peer (P2P) lenders, payday lenders, and other nonbank entities. Finance companies typically charge higher interest rates than banks or credit unions, but they may approve you for a loan when a bank won’t. P2P lenders may offer low interest rates if your credit is good, but much worse rates than banks if you are considered a credit risk. Payday loans are notoriously bad loans, charging high interest rates and often hidden fees.

Pre-approval vs. final approval

You'll notice that the terms "pre-approval" and "final approval" are both used above. These are two different things, and knowing what they mean will help you understand how personal loans work.

Pre-approval

Let's say you decide to rate shop and want to check out five different lenders. Most lenders run a soft credit check (that doesn't affect your credit score) before letting you know if you qualify for a personal loan. Once you've pre-qualified, they tell you more about the interest rate, annual percentage rate (APR), and terms. This process has no impact on your credit score, which gives you the freedom to check as many lenders as you would like until you find a loan that works for you.

Final approval

Once you've decided that a loan is right for you, it's time to let the lender know that you want to move forward. At this point, the lender runs a final hard credit check. This hard check dings your credit score slightly. Don't worry — the ding can be erased by making your monthly payment on time for several months.

Even if a loan application is pre-approved in minutes, it typically takes from one to 10 business days to receive final approval and the disbursement of funds. If you filled out your application accurately and nothing has changed in the interim, you're only waiting for the lender to verify the information provided.

You will find one thing to be true of any loan: the better prepared you are, the easier the process will be — and the happier you're likely to be with the outcome.

FAQs

  • The amount of time to get a loan depends on the lender, but it's typically 1-10 days. It might take longer if you're self-employed.

  • Be prepared to provide the lender with proof of identification, income, and residency. Respond quickly to lender requests.

  • Yes, but the fees and interest rates on same-day loans can cost you hundreds of dollars above other loans. It's better to wait a few days for approval on a less expensive loan. If you can, the best way to get a loan is to take your time, compare multiple lenders, and find the best one for you.

3. How long will I have to pay it back?

You'll have to begin paying the loan company back in monthly installments within 30 days. Most lenders provide repayment terms between six months and seven years. Both your interest rate and monthly payment will be impacted by the length of the loan you choose.

What You Need When Applying for a Loan

Getting approved for a personal loan requires proving that you are both able to make payments, and likely to do so. The first thing that lenders will look at is the application that you submit.

When you apply, you’ll be asked for information such as:

  • Name
  • Address
  • Date of birth
  • Proof of identity, such as a driver’s license
  • Social Security number
  • Annual income
  • Proof of income, such as bank statements or pay stubs
  • Verification of employment

By making sure your application includes all this information and is as accurate as possible, you can improve your chances of qualifying for the loan.

Another major aspect of lending decisions is your credit score. Your credit score is a number that indicates your trustworthiness and how likely you are to actually pay off your debts.

The number is determined by a formula that incorporates multiple factors:

FICO Credit Score Factors and Their Percentages

FICO credit score factors Percentage weight on credit score: What it means:
Payment history 35% Your track record when it comes to making (at least) the minimum payment by the due date.
Amounts owed 30% How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.
Length of credit history 15% The average age of your active credit lines. Longer histories tend to show responsibility with credit.
Credit mix 10% The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)
New credit 10% The new lines of credit that you’ve requested. New credit applications tend to hurt you score temporarily. Learn more about FICO credit score

Improving your credit score can improve your chances of getting approved for a loan. You can improve your credit score by:

  • Paying down your credit card balances
  • Avoid applying for a lot of loans or credit cards
  • Using credit responsibly for a long time
  • Negotiating a pay-for-delete agreement

A pay-for-delete agreement is when you contact a lender that you’ve failed to pay on time.

You offer to pay the debt in full if they remove the mark indicating your failure to pay from your credit report.

Most often, collections agencies are willing to negotiate these agreements. Collections agencies buy your debt from your original lender at a discount. Collecting then becomes their job.

They specialize in getting paid for debts they’ve purchased and pay-for-delete agreements are among the many tools they use.

The final part of getting approved for a loan is your debt-to-income ratio.

The whole point of the loan approval process is for the bank to determine how likely you are to pay your monthly payments.

The more debt you have when compared to your income, the less money you have available to make payments on a new loan. You can better your chances of getting approved by paying down your existing loans or increasing your income.

What To Watch Out For

When speed is a priority, you may end up paying more. The fastest loans available may have high rates and fees. While you can solve an immediate problem with products like payday loans, be wary of borrowing money that will be difficult to pay off and cause financial struggles.

To compare loans, try using our personal loan calculator to discover your monthly payments. Try using different rates to find out how much your payment might vary.

Con artists sometimes target people who are desperate for cash. Beware of misleading promises, especially if you’re denied by a traditional lender or it says you need to wait longer than you’d like for the funds. Unfortunately, paying an upfront, out-of-pocket fee is often a sign of a scam. Some personal loans have origination fees, but those charges come out of your loan proceeds—after you’re approved.

Personal documents you need to take out a loan

Lenders will typically require that you submit documentation to verify your information when going through the personal loan process. Here are a few documents you can expect to provide:

  • A loan application: The first step in getting a personal loan is to submit an application to a lender. This form should include your personal information, but also the reason for your loan, your credit score and income. After you turn in your application, your potential lender may contact you to verify the information you have provided.
  • Personal identification: You’ll typically need to prove to lenders that you are who you say you are. You may need to provide government-issued IDs, such as your driver’s license, birth certificate or passport, as well as your social security number.
  • Proof of address: Lenders may want to know where you live so they can send you bills and contact you. You may have to provide documents such as a copy of your lease agreement or utility bill to prove that you live at the address you stated.
  • Proof of income: Lenders want to know that, if they lend you money, they’ll be repaid. Your income can give lenders insight into whether you are able to repay the loan. To verify this, you may have to give documents such as W-2s, pay stubs or tax returns.

Online lenders: Typically less than 5 days

If you’re looking to get a personal loan quickly, an online lender might be the best option.

Online lenders are non-traditional banking institutions; they may operate entirely online or as an arm of a traditional banking institution. Many online lenders don’t have brick-and-mortar branches, which saves them overhead costs and often allows them to provide competitive products and lower interest rates. But this usually means you can’t visit 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 right for those who prefer a paper or in-person loan application.

  • Time to apply — Applying usually takes minutes. You’ll need to provide personal information such as your address, driver’s license number, Social Security number and proof of income.
  • Time to get approved — Approvals can be instant in many cases, if no additional information is needed, or might take just a few hours.
  • When funds get disbursed — You can generally expect funding as soon as the same business day or as long as 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, whether more information is required and how fast your bank processes the transfer. 

For example, Credible partners LightStream and OneMain Financial can fund loans as soon as the same business day that you’re approved. And if you’re approved by 4:30 p.m. Central Time on a weekday, Avant (also a Credible partner) can fund your loan by the next business day.

You can compare personal loan rates using Credible without affecting your credit score.

Tips for speeding up the process

If you’re looking for a personal loan, you likely want to get your hands on the money as soon as you can. These tips can help you avoid delays when applying for a personal loan”

  • Check your credit report before applying. Know where your credit stands before shopping around for personal loans. Good credit can make it easier to qualify for a personal loan at a lower interest rate. Furthermore, spotting and correcting errors immediately is a simple way to avoid issues later on when you’re applying for a loan. Pay off debt. If you have debt and you don’t need the loan funds urgently, paying some debt off can raise your credit score and lower your DTI ratio, which can increase your chances of approval.
  • Talk to your existing financial institution. Banks and credit unions might be more willing to consider a personal loan application from a customer with whom it’s had a positive, long-standing relationship.
  • Get prequalified. Some lenders have a prequalification process that you can undergo without a hard credit check. You can also get an idea of what your loan rates and terms may be before you apply to determine if moving forward with the lender is worthwhile.
  • Consider online lenders. Many online lenders offer next-day loan decisions, and funds may be deposited into your bank account within a few days after applying if you are approved.
  • Pick loan funds up in person. If your lender has a brick-and-mortar location, ask if there is an option to pick funds up at the branch so you can get the money faster.

How Do Personal Loans Affect Your Credit?

Personal loans show up on your credit report and, in turn, affect your credit score. This can be a good thing that helps improve your score if you repay the loan as promised. If you’re using a personal loan to consolidate revolving credit card balances, you could end up significantly reducing your credit utilization rate—something that could help increase your credit score. Having a healthy mix of different types of credit accounts on your credit report can also be good.

However, falling behind on your personal loan payments will reflect negatively on your credit report and drag down your score. At the end of the day, you’re also adding more debt to your name, which could complicate your overall financial health. This impact on your finances can also wind up affecting your credit score. Those who incur new monthly expenses or have a change in income, for example, may find it difficult to keep up with other monthly bills—even if they continue to make good on their personal loan payments.

What are personal installment loans?

Installment loans are a type of personal loans that have strict payment schedules attached to them. Some personal loans don't have these due dates like auto or home loans. These loans are typically larger than personal loans that you might need to cover unexpected expenses.

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