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How to apply for a personal loan in 4 easy steps

A personal loan might help you consolidate high-interest debt or fund a major purchase. Here's how to apply for one.

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Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We earn a commission from affiliate partners on many offers, but not all offers on Select are from affiliate partners.

Borrowing money comes with some risk and, in many cases, some fees. Before you apply for a loan, you should know what to expect.

Personal loans have been growing in popularity: Nearly 22% of U.S. adults have one, according to credit bureau Experian. People commonly use them to consolidate or refinance debt, but they can also help you finance a home improvement project, take a vacation or cover the costs for a cross-country move.

Just be sure you understand the terms and conditions before you take out a personal loan, including interest rates, origination fees and early payoff penalties.

You also need to know how to apply: Personal loan applications take a little longer than credit card applications, because you're required to provide more documentation. Below, Select offers a step-by-step guide to the process.

Step 1: Decide how much you need

The first step in choosing a personal loan is knowing how much you need. The smallest personal loans begin at around $600 (from a lender like credit union PenFed), but you'll more commonly see minimums of around $1,000. If you need less than that, it might be easier to save up extra cash, borrow the money from a friend or family member or put the charge on your credit card.

Step 2: Prequalify and compare offers

Once you know how much you need, you'll want to do some research and compare the rates and fees of different loan providers. An easy way to get started is with a loan comparison tool.

Select's personal loan comparison tool asks you 16 questions, including your annual income, date of birth and Social Security number in order for Even Financial to determine the top offers for you. The service is free, secure and does not affect your credit score.

This tool is provided and powered by Even Financial, a search and comparison engine that matches you with third-party lenders. Any information you provide is given directly to Even Financial and it may use this information in accordance with its own privacy policies and terms of service. By submitting your information, you agree to receive emails from Even. Select does not control and is not responsible for third party policies or practices, nor does Select have access to any data you provide. Select may receive an affiliate commission from partner offers in the Even Financial tool. The commission does not influence the selection in order of offers.

When you review a variety of loan offers using the tool above, you can get a better sense of the loans you'll be eligible for, including how much you could borrow, what your interest rate might be and the terms of the loan.

Lenders like Marcus and LightStream also have prequalification forms on their websites.

Submitting an application to prequalify for a loan is usually considered a "soft pull" and doesn't count as a hard inquiry on your credit report, which can ding your credit score. Read the fine print to be sure, as most sites explain this upfront.

For a soft inquiry, you'll need the following information:

  • Name, date of birth, address and (for most loans) social security/tax ID number
  • Annual income (including salary, wages, tips, bonuses and other forms of income)
  • Basic financial information (rent/mortgage payment, other major bills)
  • Requested loan amount and ideal term length

Review your available offers and pick the one that works best for your timeline and budget.

Step 3: Gather documents and submit application

Once you review your loan options, you'll want to make a decision and submit a full application. Ideally, you do this only once because it's a hard inquiry on your credit report.

The necessary documents will vary according to your lender, but typically you have to have proof of income and monthly expenses. Documents might include:

  • Recent paystub(s)
  • Checking account statements for past three to six months
  • Photo ID
  • Proof of address
  • Education history (including highest level/degree achieved)
  • Other financial information (retirement account statements, outstanding debt, investment assets, etc.)
  • Preferred bank account for direct deposit

Read over the terms carefully one last time, then submit your documentation.

Step 4: Wait for approval and funding

Approval can happen within the hour after you submit your application, or it could take three to five business days.

If your application is approved, you can expect to see the amount of your loan, less any origination fees, in the bank account you listed for direct deposit. If you're taking out a debt consolidation loan, you might choose to have your funds sent directly to the credit card companies to pay off your balances. And if you don't sign up for direct deposit, your lender will mail you a paper check.

Once the money lands in your account, expect to make your first payment on the loan within 30 days. Double check to make sure you've signed up for autopay (you might even get an interest rate discount if you do). Add your monthly payment amount to your budget so that you never miss a bill, as on-time payment are important to keeping your credit score in good shape.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.