To get a personal loan, you’ll need good credit, a stable income and a steady employment history.
Bad credit loans are available, but rates can be high and loan amounts may be limited. You’ll qualify for a lower, more competitive rate with good-to-excellent credit.
Most personal loans are unsecured, which makes them faster and easier to get than collateral-backed loans.
Shopping for personal loans with multiple lenders could land you the best deal.
Getting a personal loan is relatively simple. Most lenders offer a fully online application process and only require information about your income, credit history and bank account to get a quote. Your final offer requires a hard credit check and proof of your last couple of paychecks.
If you have excellent credit and little debt, you could borrow up to $100,000 from some lenders with repayment terms as long as seven years. However, if you have fair or bad credit, you may need to take extra steps to increase your approval chances and should expect to pay higher rates and fees with more limits on how much you can borrow.
Knowing the steps required to get a personal loan can help you get quick cash for debt consolidation, home improvement, medical bills or other expenses.
Personal loan annual percentage rates (APRs) can range from just below 6% up to 35.99% , and the rate you receive depends mostly on your credit score. Higher scores (typically 670 or above) translate to lower rates, larger loan amounts and fewer fees.
Lenders rely on your credit score to predict how likely you are to repay the debt as agreed — a high credit score demonstrates your history of responsible credit usage, and as a result, you’re more likely to qualify for the lender’s lowest rate. The difference between a loan with excellent credit and a bad credit personal loan can be hundreds of dollars a month and thousands of dollars in overall interest.
According to TransUnion’s Unsecured Personal Lending Industry Insights Report, which is based on data from real, funded personal loans, here’s how your credit score could change your APR:
Risk tier | Credit score range | Median estimated APR |
Near prime | 601-660 | 26.90% |
Prime | 661-720 | 17.80% |
Prime plus | 721-780 | 13.00% |
Super prime | 781+ | 10.90% |
Example: For a near prime borrower, a $10,000 personal loan at 27% costs about $15,000 in interest over five years — more than the loan itself.
Bankrate tip
Consider working to improve your credit score if you don’t qualify for an affordable rate.
Your credit score is typically the most important part of the eligibility puzzle, but lenders also review other criteria when assessing your loan application. According to one experienced Chase Bank representative, these criteria often serve as an initial screening. While each lender sets its own standards, knowing the common approval metrics can help you prepare and improve your chances of qualifying.
Decide exactly how much you need to borrow and how much you can afford to repay each month. Personal loans are installment loans, which means you receive the full amount upfront and then repay it in fixed monthly payments. If you need additional money, you must reapply for a new loan.
Be sure to consider any origination fees when determining how much to borrow. Some personal loan lenders charge origination fees of up to 12% of your loan amount, and the cost is typically deducted from your loan funds before you receive them. If you select a lender that charges this fee, you may need to borrow a larger amount to account for the fee.
Here’s an example of how APR and fees impact monthly payments on a $10,000 loan with a three-year term:
APR | Origination fee | Loan amount received | Monthly payment | Total interest + fees |
9% | 0% | $10,000 | $318 | $1,448 |
15% | 5% ($500) | $9,500 | $346 | $2,456 |
25% | 8% ($800) | $9,200 | $398 | $4,328 |
Bankrate tip
Once you’ve zeroed in on your loan amount, run some numbers using a personal loan calculator. Experiment with longer terms if you want to keep your payment lower or shorter terms if you want to pay the balance off quickly.
You’ll need to provide loan documentation to verify the information in your application, and gathering these documents ahead of time can speed up the process later.
Some lenders may verify this information electronically.
Don’t settle for the first offer. Compare several lenders and loan types to get an idea of what you qualify for.
If you’ve been a longtime account holder with your bank or credit union, see if it’s willing to give you a better rate or offer you any perks or discounts. You can also search the Bankrate personal loan marketplace to find the most competitive loan that best meets your borrowing needs.
Prioritize lenders that offer prequalification
Loan prequalification involves entering some basic information and previewing your potential eligibility and interest rate. This process doesn’t require a hard credit inquiry, so your credit score won’t be impacted. Prequalification isn’t a firm loan offer, and your loan details may change when you formally apply, but it can be a great way to narrow your list of potential lenders.
Once you’ve compared lenders and chosen the best fit, submit a formal application. This may involve a hard credit pull and additional verification.
If approved, you’ll receive your loan terms. Review carefully before signing — a longer term lowers your monthly bill but increases total interest costs.
Keep in mind the terms of your offer could change depending on the documents you provide. Ask the lender to explain any changes to your interest rate or loan amount after your initial application.
If your loan application is approved, the lender will prepare your final loan documents. Once you agree to the terms and sign the loan contract, many lenders will disburse funds directly to your bank account within one business day at most lenders. It could take up to a week to receive loan funds if you prefer a physical check or work with a smaller bank or credit union.
Keep track of when your payments are due, and consider setting up automatic payments to streamline the process. Some lenders even offer interest rate discounts if you use autopay.
Bankrate tip
Consider paying extra toward the loan principal each month, even if it’s only a small amount. While personal loans are often cheaper than credit cards, you’ll still save money on interest by paying the loan off early.
Getting approved for a personal loan can be a simple process. Increase your chances of approval by taking some steps ahead of time, like knowing your credit score and understanding lender requirements. Doing some research before you apply could make the difference between a green light for financing or a loan denial. Compare lenders to find the best rates and terms for your specific financial situation.
