How to Apply for a Personal Loan
Whether you’re hit with an unanticipated home repair, facing a medical emergency, or trying to consolidate high-interest credit card debt, a personal loan could help alleviate the financial burden. With a personal loan, you may be able to borrow what you need and then pay it back over time with fixed monthly payments.
In This Article
- Applying for a Personal Loan
- How Your Loan Application Is Reviewed
- Before You Apply
- Qualifying for a Personal Loan
The personal loan application process can differ from one lender to the next, but the steps tend to be similar.
1. Check your rate.
Some lenders let you check your loan rate without submitting a formal application. At LendingClub, we use information like your name, address, date of birth, income, and how much you want to borrow to see if you’re likely to qualify for a loan and provide an estimated rate. Checking your rate allows you to compare multiple potential loan offers and typically doesn’t impact your credit score. When comparing rates and offers, make sure to review total loan amounts, APRs, interest rates, repayment terms, and origination fees.
2. Complete your loan application and verify your identity.
Once you’ve decided on a lender, complete an official application. In most cases, you’ll be required to submit documentation that verifies your identity, residence, or income. This can include a photo copy of your government-issued photo ID, recent utility bills, or other documents. You can usually submit copies of required documents from your mobile device or your computer.
3. Wait for approval.
Loan approval can take anywhere from a few hours to several days. At LendingClub, most members are approved within 24 hours.3 We also give you the ability to check your application status at any time.
4. Review your offer.
Your offer may be different than when you checked your rate, so take care to review the terms in detail before accepting.
5. Accept your offer and receive your funds.
Once you accept your offer, funds are transferred into your bank account. Though funding speed varies, our members receive funding in 48 hours.1
When applying for personal loans, the decisioning process varies. However, at LendingClub, we look at information from your application and credit report, as well as your payment history and other factors.
A good credit score (670 or higher) is one of the key factors that all lenders use in determining whether you are eligible for a loan and the interest rate you’ll receive. If possible, work on improving your credit score before applying, or apply with a co borrower to strengthen your chances at getting approved.
Payment history is a significant factor in determining your overall credit score and something most lenders look at when determining loan eligibility. If you have a solid history of repaying debts on time, it gives assurance that you’ll pay this debt back, too.
Your debt-to-income ratio (DTI) compares your monthly debt obligations to your monthly gross income. A lower DTI can show the financial ability to repay debt on time.
What You Should Know Before You Apply for Personal Loan
Evaluating your finances and creditworthiness can save you time and effort before applying for a personal loan. Before applying for a loan, ask yourself these three questions.
What does your credit report look like?
You can request a free copy of your credit report each year from each of the three major credit bureaus. When reviewing your credit report, make sure all of your debts are current and address any late payments or past due balances immediately. While this won’t erase the past—missed payments remain on your credit report for seven years—it can help show lenders you’re working on improving your financial situation.
You should also check for any errors to your credit report, as they can negatively impact your creditworthiness. If you do find errors, contest them immediately with one of the three major credit bureaus.
Even if you aren’t applying for a personal loan, occasionally checking your credit report for accuracy is one of the best ways to protect your credit.
How much can you afford to borrow and repay?
Loan amounts vary depending on the lender, but at LendingClub Bank, we offer loans from $1,000 to $40,000.
When determining the amount to borrow, consider how much you need for your loan purpose. Remember: you’ll be paying back the total amount of the loan plus interest, so choose an amount you can comfortably afford to repay. If you aren’t sure, our personal loan calculator can help you estimate monthly payments.
Should you consider a co-borrower?
If you’re still in the process of building your credit history or working to improve your credit score, you may want to consider adding a co-borrower to your loan application. A co borrower with a strong credit score and credit history can improve your chances of getting a loan with favorable terms.
To borrow from LendingClub Bank, you must be at least 18 years old and a United States citizen or permanent resident, or live in the US on a valid, long term visa. We also require you have a verifiable bank account.
Aside from reviewing information on your application, we look at your creditworthiness, credit score, and information that predicts you’ll be able to repay the loan—like your income and job history.
Applicants who qualify for the lowest rates have a high credit score, a low DTI, and a long history of successful credit lines.
The Bottom Line
A personal loan is a great way to consolidate high-interest debt or pay for an emergency or unexpected circumstance. The fixed interest rate and set monthly payments allows for predictability which can help with your monthly budget, and making on-time payments towards a personal loan can help you improve your credit score.2 Applying is typically quick and easy, and most applicants get an answer—and potentially the funds—within two days.1
Why apply for a personal loan?
You can use a personal loan for many purposes, like to pay off higher interest rate credit card debt, tackle home repairs, or cover unforeseen medical expenses. Loans from LendingClub Bank come with low, fixed rates—rates that are often substantially lower than credit cards, which can help your overall financial situation.
What credit score do you need to get a personal loan?
While it’s possible to get a personal loan with a lower credit score, a FICO score that is considered good (670–739) or excellent (800 and above) can improve your chances for getting approved. Typically, the higher your credit score, the better your chance at receiving a loan offer with a lower interest rate.
What size personal loan can I apply for?
Personal loans can range from a few hundred to thousands of dollars. But in most cases you’ll be offered an amount based on what you can afford given the information on your application and credit report. You should also remember the more you borrow, the more you’ll pay in interest—so it’s usually best to ask for only what you need.
Many factors go into qualifying for a personal loan. Strong applicants will have a good credit score, proof of steady employment and income, and a low debt-to-income ratio.
Can you cancel a personal loan application?
If your loan application is approved, you’ll be sent an official offer, which you do not have to accept. If you do accept the loan and change your mind, there is often an option to cancel it, but that depends on who funded the loan. If you receive a loan through LendingClub Bank, you have five calendar days to change your mind. If you do want to cancel, make sure you keep all the money in your account—we'll try to withdraw it within 5–7 business days.
How long does it take to receive a personal loan?
The time it takes to receive your money depends on the granter. LendingClub members are typically approved for a loan within 24 hours.3 If accepted, funds can be available within 48 hours.1,
If my application is declined, can I apply again in the future?
If you’re declined for a personal loan, you’re typically welcome to go back and apply. If denied, lenders are required to send you an adverse action notice, which lists the reasons your application was declined. Review this notice and work to improve your financial situation. In some cases, reapplying with a co borrower or asking for a smaller loan amount can help strengthen your chances of getting approved.
1 Between April 2021 and June 2021, personal loans were funded within 48 hours after loan approval, on average. The time it takes for a loan to be funded is not guaranteed and individual results vary based on multiple factors, including but not limited to investor demand.
2Reducing debt and maintaining low credit balances may contribute to an improvement in your credit score, but results are not guaranteed. Individual results vary based on multiple factors, including but not limited to payment history and credit utilization.
3Of all personal loans approved between 10/1/20 - 12/31/20, 69% were approved within 24 hours.