Whether you’re in a financial pinch or hoping to make a major purchase, a personal loan can be one way to get the cash you need as you work toward your goals. Understanding how to fill out a personal loan application can increase your chances of getting approved and seeing the money much faster.
Let’s take a look at what you need to know as you fill out a personal loan application.
Key Takeaways
- Personal loan applications typically require your Social Security number (SSN) and/or some other form of identification, bank statements, and possibly other financial documents, as well as pay stubs (and potentially tax returns).
- You can apply for a personal loan either in person or online. Applying in person allows you to work closely with a loan officer, which may afford you some additional leeway, but applying online can be more convenient.
- Depending on whether you apply in person or online, you’ll know if you’re approved for a personal loan either right away or after a few days. After that, it can still take a couple of business days (or longer) for your loan funds to become available.
Requirements for a Personal Loan
First, it’s important to understand the requirements for a personal loan. A personal loan is often unsecured, meaning you don’t need to use something valuable as collateral to secure it. For the most part, your personal loan approval will depend on your credit score and your income.
A good credit score will make you more likely to qualify for better interest rates and terms. However, it’s still possible to get a personal loan with poor credit in some cases. You’ll also need to provide proof of regular income, so the lender can be reasonably sure that you’ll be able to make payments. Beyond that, a personal lender usually requires you to provide bank account information so they can directly deposit the funds, in addition to automatically withdrawing payments later.
Documents to Complete a Personal Loan Application
As you apply for a personal loan, you’ll need to provide some documentation for the lender. Each lender has its own requirements, but some documents that you’re likely to need include:
- Identifying documents: You usually need to provide your Social Security number (SSN), and some lenders require you to share your driver’s license number. Depending on the lender, you might need to upload a picture of your driver’s license.
- Financial documents: In some cases, you might need to provide bank statements. These statements illustrate when you expect to have regular deposits into your account and offer an overview of your financial situation.
- Income documents: Finally, you might need to provide pay stubs from your job to show your income. Some lenders might ask for tax returns as well.
When applying for a personal loan, having all this information readily available makes sense. You can speed up the process by being prepared with these documents before you begin an application.
Best Banks for a Personal Loan
Before you apply, compare three to five offers from different lenders. In many cases, you can get a quote by agreeing to a soft credit inquiry, which has no impact on your credit score. After you decide which bank to use for a personal loan, the lender will perform a hard credit check, which will slightly affect your credit score.
Deciding on the best bank for a personal loan depends on your situation, your needs, and which bank is likely to help you meet your goals. For example, if you need a small loan and have poor credit, Upgrade might be a good choice for your loan. However, if you have good credit and want access to more funds, SoFi might provide you with more options.
Some other banks that might meet your funding needs include:
- Rocket Loans
- First Tech Federal Credit Union
- Discover Personal Loans
- PenFed Credit Union
Carefully consider your circ*mstances and the loan’s purpose before you decide on a lender.
How Do You Fill Out a Personal Loan Application?
Before you fill out a personal loan application, it’s important to consider how you plan to use the funds and how much money you need. Make sure you have an idea of when you need the money as well. While many personal loans can be funded quickly, it might still take a few days for you to get your cash. Understanding when a personal loan is a good idea can help you decide the best way to go about applying.
Once you know how much you need and how you plan to use the money, you can compare lenders and then make a decision about where to apply. After deciding where to apply, you must prepare to fill out the personal loan application. Here are the steps you need to take.
Decide How You Want to Apply
Figure out whether you want to apply in person or online. There are pros and cons either way.
When you apply in person, you can sit down with someone else and explain your situation. A loan officer might have some leeway to look at the individual merits of your circ*mstances and provide a little more flexibility, especially if you’re already a customer of the bank or credit union.
On the other hand, applying online offers you more flexibility in terms of timing. You don’t have to worry about bank or credit union business hours. Additionally, you can usually get a decision within minutes (or even seconds) when you apply online. Depending on the situation, you might be able to get your money faster with an online application.
Think about what might be most comfortable for you, then go from there as you decide how you want to apply.
Collect Your Personal and Financial Documents
Next, gather your documentation. Do this even before you actually start filling out the application. You want to have everything you need available to you before you begin. This is especially important if you decide to apply for your personal loan in person. Call the lender ahead of time, before your appointment, to find out what documentation you’ll need. If you apply in person and are missing information, you will need to go get it, slowing the application process.
If you apply online, having all your documents ready to go can keep the process moving, but if you’re missing something, it’s much easier to find it and submit it than if you’re applying in person. While every lender is different, you might expect to be prepared with the following information:
- Social Security number (SSN) to identify you as a U.S. citizen and establish who you are. Your SSN might also be used to pull your credit history and score to evaluate you for loan approval and determine your interest rate.
- Driver’s license number to further establish your identity. If you don’t have a driver’s license, you might need to provide some other type of identifying information, such as a state-issued or military ID number.
- Annual income to indicate that you have a stable paycheck. You might need to provide copies of your pay stubs or tax returns. Consider having pay stubs available for the last three months and the last two years’ worth of tax returns.
- Bank statements can help lenders determine your overall financial picture. You might need to show your checking account statements for the last two or three months, so be prepared. In some cases, a lender might connect to your bank account using a secure third party like Plaid to see your information.
- Bank account information for deposits and payment withdrawals. Often, the lender will want to directly deposit the funds into your account, especially if you apply online. When making payments, many lenders prefer an auto pay arrangement, where they can withdraw the money on a schedule. Some lenders offer an interest rate discount if you agree to auto pay.
Once you have this information, you’re ready to fill out the application, either in person or online.
Fill Out the Information
Begin going through the personal loan application and providing the required information. Normally, you’ll need to share your name, birthdate, physical address, mailing address, phone number, and email address. All of this information is designed to establish where you live, whether you’re old enough to get a loan, and how to get ahold of you.
Next, you might need to provide your SSN and driver’s license (or other ID) information. You’ll fill in how much you pay for housing (rent or mortgage payments) and might have to include information on any other debts you have. You typically need to provide your annual or monthly income as well. Bank statements and tax returns might be required to back up your information. Lenders sometimes require you to upload copies, so be prepared to scan the information or get PDFs of the required documents.
Your application will also ask about the amount of money you’re asking for, as well as the purpose of the funds. Generally, you can use personal loan funds for almost anything. There are some exceptions, such as education costs and illegal activities, but most lenders will provide personal loans for almost any purpose. You’ll choose your preferred loan term, usually agreeing to repay the loan within two to five years (although some lenders offer different term lengths).
Finally, if you have a co-signer, you’ll have to provide all of their information. If you’re not sure that you’ll qualify for a personal loan based on your credit and income, a co-signer can help you get approved.
Submit the Application
Finally, review all the information you provided to make sure it’s accurate. Also be sure to check that you’ve provided all of the required information. If you’re filling out the application in person, the loan officer can help you review the application and ensure that everything is in order. If it looks good, sign the agreement and submit the application.
Wait for the Decision
Once you submit your application, you’ll need to wait to see if you’re approved. When submitting online, the decision might only take a few minutes. In some cases, it might only take a few seconds. In-person applications might take longer. Some loan officers can let you know within a few minutes, but it could also take a few days to get your approval decision.
If you are approved, an online personal lender can usually deposit the money in your account within one or two business days. For in-person applications, it might take longer to access your money. In some cases, in-person applications result in a check rather than a direct deposit. In this case, you would have to wait for the check to clear before the funding becomes available.
How Do People Use Personal Loans?
Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.
What Is the Risk of a Personal Loan?
With any loan, you run the risk of having too much debt and being unable to make payments. Your account could be sent to collections if you miss payments, or the lender can sue you for wage garnishment or other actions. Additionally, if you don’t make your payments, you could see a drop in your credit score.
What Is a Good Interest Rate on a Personal Loan?
A good interest rate on a personal loan depends on market conditions and other factors. However, if you have good credit, you might be able to get an interest rate of 6.99% to 11.99%. Depending on your credit and income, a good interest rate on a personal loan is usually one that is lower than what you would see with a credit card.
How Do You Know If You Qualify for a Personal Loan?
Some lenders will use a soft credit inquiry to give you an idea of whether you would qualify for a personal loan with them, without impacting your credit score. However, the only way to know for sure if you’ll be approved is to go through the application process, which means having a hard inquiry added to your credit report.
What Credit Score Is Checked for a Personal Loan?
The credit score used for a personal loan application depends on the lender and which scoring model they use. Typically, however, a lender will use either the FICO or VantageScore model based on the information in your credit report with one of the major credit reporting agencies (Equifax, Experian, or TransUnion). The lender must let you know what score they used when providing you with their decision if your application is rejected.
The Bottom Line
Personal loans can help you meet your financial needs and goals. However, you’ll need to go through an application process for potential approval. Make sure you have everything you need before you start applying for personal loans so that you get a faster decision.
