How to Get a Personal Loan (Step-by-Step Guide)

Getting a personal loan is a straightforward, easy process. Simply pick a lender, fill out the application and wait for your approval. But approval and rates depend heavily on your credit profile, income and existing debt. So if you want the best rates and lowest fees, it pays to do a little more research first. 

In fact, making sure you understand how to get a personal loan before filling out any application can help you avoid surprises and save money in the long term.

How to Get a Personal Loan: 5 Easy Steps

While you can apply in person at a bank or credit union, you can also get a personal loan online, from the comfort of your couch. Here’s how:

1. Check Your Credit Score

Before applying for or even researching personal loans, check your credit score to estimate your approval odds and potential interest rate. Higher credit scores make it easier to get approved—and at a lower rate.

Although you can get a personal loan with poor or no credit, your choices are limited, and you’ll pay high fees and interest.

If your credit score needs some work, waiting to apply until it’s in better shape could improve your odds. 

2. Decide How Much You Need — And How Much You Can Afford

Most lenders offer personal loans between $1,000 and $50,000. However, there are lenders with loan limits of $100,000 or more. But don’t apply for the max amount just because.

Before applying, ask yourself:

• How much money do I need? Make sure you’re borrowing enough to cover your needs, such as moving expenses or debt consolidation.
• How much can you afford? Although getting $50,000 deposited into your bank account sounds amazing, it’ll cost you a lot more to repay the loan in the long run. Use a personal loan calculator to estimate monthly payments based on loan size. Choose a loan amount that you can safely work into your monthly budget.

Pro Tip: Many personal loans have origination fees that are deducted from the amount of money you get. For instance, a 5% origination fee on a $10,000 loan means you’d only get $9,500. Account for this fee when deciding on a borrowing amount.

3. Compare Lenders

Your goal isn’t only to get a personal loan, but to get the best personal loan, meaning low fees and manageable repayment terms. To find the best option, research multiple loans from banks, credit unions and online lenders.

When reviewing, compare each lender’s:

• APR range
• Origination fees
• Repayment terms
• Funding speed

You can speed up this process by using an online loan marketplace. These allow you to get prequalified with multiple lenders (without a hard credit check) and compare options in one place.

4. Get Prequalified

Most lenders allow you to get prequalified for a personal loan without a hard credit check. You can see the rates, terms and loan amounts you’re likely to be offered if you apply.

This helps you compare offers and estimate payments, but it doesn’t guarantee approval. To find out if you’re approved, submit a full application.

5. Submit a Formal Application

Once you’ve selected your preferred lender and prequalified, you can submit a formal application. This means agreeing to a hard credit check, which results in a slight, temporary drop in your credit score (usually fewer than 5 points, and only for a year.)

In addition to the credit check, you’ll supply documentation to confirm your income, assets, employment, address and identity.

If approved, you’ll get an offer with all the rates and terms. Review carefully. If you like the offer, sign for the loan, and wait to receive the funds—usually via direct deposit into your bank account.

What Do You Need to Qualify for a Personal Loan?

To get a personal loan, you must meet the lender’s requirements for credit, income, debt-to-income ratio and employment. Requirements vary by lender, but here’s a general look at how to qualify for a personal loan.

Minimum Credit Score Requirements

Most lenders look for a credit score of at least 600, though some require higher scores and offer better rates. Other lenders may offer personal loans with fair credit, but rates and fees will be higher.

Here’s a look at FICO’s credit score ranges and what that means when getting a personal loan:

Credit Score Range	Rating	Personal loan details
800+	Exceptional	You’ll qualify with most or all lenders and get the lowest rates, best terms and high loan amounts
740 – 799	Very good	You’ll qualify with most lenders with competitive rates and favorable terms
670 – 739	Good	You’ll qualify with many lenders but will pay moderate rates and fees
580 – 669	Fair	You’re limited to a smaller set of lenders, which may require co-signers or collateral; rates and fees will be high
<580	Poor	Personal loan options very limited; if you can, expect the highest rates and fees

Income Requirements

Lenders require proof of stable income to ensure you can afford your monthly payments. There’s no standard income requirement, and there are lenders who cater to borrowers with fair or worse credit accept incomes as low as $25,000 a year. However, it really depends on the lender and the loan. 

Here’s what lenders usually accept as income:

• Employment wages
• Self-employment income (such as freelancers, consultants and rideshare drivers)
• Retirement benefits or investment dividends
• Public assistance, such as disability income

Debt-to-Income Ratio Requirements

Your debt-to-income ratio (DTI) measures your monthly debt payments compared to your monthly income. Most lenders want to see a DTI of 36% or less, meaning only roughly a third of your monthly gross monthly income goes toward debt repayments. Some lenders may accept DTIs as high as 43%.

Documents You’ll Need

To get a personal loan, you’ll need to supply documentation including:

• Proof of identity, such as a government-issued ID
• Proof of income, such as recent pay stubs, bank statements or tax returns
• Proof of address, such as a utility bill in your name

What Interest Rate Can You Expect on a Personal Loan?

Annual percentage rates (APRs) for personal loans typically range from 6% to 36%, though the most qualified borrowers qualify for the lowest rates.

In addition to credit and income, rates depend on loan terms, loan amounts and market conditions. Many lenders offer small rate discounts (typically 0.25%) for enrolling in automatic payments.

Pro Tip: Compare APRs, not interest rates. APRs represent the full cost of borrowing, including interest and fees.

According to February 2026 data from Credible, these are the average personal loan rates by credit score (excluding bad credit, and rates vary by lender/term):

Credit Score Range	Average APR (rounded)
800+	11% – 15%
740 – 799	13% – 18%
670 – 739	20% – 23%
580 – 669	29% – 31%

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How Long Does It Take to Get a Personal Loan?

It usually takes one to seven days to get a personal loan after applying, but many online lenders offer much faster funding via direct deposit. Some promise same- or next-day funding upon approval.

The general timeline includes:

• Prequalification: A few minutes
• Application and approval: A few minutes (online lenders) to a few days (brick-and-mortar banks and credit unions)
• Funding: Same day to several business days

Delays can occur if the lender can’t verify your information. Provide accurate documentation to expedite the process.

How to Get a Personal Loan With Bad Credit

Getting a personal loan with bad credit is possible, but challenging. Here’s how you can improve your odds:

Consider a Credit Union

Credit unions often have more flexible qualification standards and lower fees than banks and online lenders. The only issue is membership: You must be a member of a specific credit union to apply.

Use a Co-Signer

Some lenders let you add a co-signer to your loan, usually a close relative or friend. A co-signer with good credit and steady income can make it easier to qualify with bad credit; it may even get you more favorable personal loan terms and rates. 

The co-signer is putting their credit on the line when they help you get a personal loan. If you fall behind on payments, they’ll take over payments or risk damage to their credit score. To protect their finances and honor your relationship, stay on top of your payments.

Get a Secured Loan

Most personal loans are unsecured. Some lenders offer secured loans backed by collateral, such as a car, jewelry or investment account. It may improve your approval odds or lower rates.

Improve Approval Odds First

If you can wait three to six months before applying, you can improve your approval odds by:

• Pay down existing debts without taking on new debts
• Increasing your income by getting a side hustle or asking for a raise
• Disputing errors on your credit report

Watch for Predatory Lenders

Don’t turn to predatory lenders—with excessive fees and high interest rates—even if they feel like the only option. Especially avoid payday loans, which can have APR equivalents as high as 400%, according to the Consumer Financial Protection Bureau (CFPB).

Where Can You Get a Personal Loan?

You can get a personal loan by applying in person at a local bank or credit union, or online through a bank, credit union or online lender.

Here’s how these personal loan lender types compare:

Lender Type	Speed	Credit Flexibility	Typical Rates	Best For
Banks	Slower	Moderate	Competitive for strong credit	Existing customers
Credit Unions	Moderate	More flexible	Often lower fees	Members with fair credit
Online Lenders	Fast	Wide range	Varies widely	Quick funding

What Can Disqualify You From a Personal Loan?

You likely won’t qualify for a personal loan if you have high debt levels, a history of missed payments, unstable income, limited credit history or prior bankruptcies.

Common red flags for lenders include:

• High DTI
• Recent delinquencies
• Thin credit file
• Multiple recent hard inquiries
• Insufficient income

Is a Personal Loan a Good Idea?

A personal loan can be a good idea if you don’t have enough money in emergency savings and can get a competitive interest rate. Personal loans can be risky, however, if you already struggle with credit card debt or only qualify for a high rate.

Below are some examples of good, risky and restricted uses for personal loans.

Good uses

• Debt consolidation
• Emergency expenses
• Essential home repairs
• Moving expenses

Risky uses

• Vacations
• Weddings
• Luxury purchases
• Ongoing monthly bills

Restricted uses

• Gambling
• College tuition
• Business expenses (in most cases)

Alternatives to a Personal Loan

Personal loans aren’t your only choice for debt consolidation, home improvements or emergency expenses. Here are some other options to explore:

Payday alternative loans (PALs): Many credit unions offer small ($1,000 to $2,000), short-term (6 months to a year) loans, with rates capped at 28%.

0% intro APR credit card: You might qualify for a 0% intro APR credit card, meaning expenses don’t accrue interest for a certain period. If you pay back what you borrow before the intro period ends, you won’t owe any interest.

Home equity loan or line of credit: Homeowners can get much lower rates to fund home improvements (or other purposes) with home equity loans and home equity lines of credit, which use your home as collateral.

Medical payment plans: Many medical offices are willing to set up payment plans, often at no interest, if you can’t afford your medical debt.

FAQs About Getting a Personal Loan

Still have questions about loans? Here are some of the questions most commonly asked by readers — and the answers:

Bottom Line: How to Get a Personal Loan

To get a personal loan, check your credit, determine how much you can and need to borrow, compare multiple lenders, prequalify and submit a formal application. Many online personal loan applications only take a few minutes, and you can see if you’re approved just as fast.

To improve your approval odds for a personal loan, focus on improving your credit score and reducing your debt-to-income ratio.

And remember: Personal loans are multi-year commitments. Make sure you can afford the monthly payment for several years before accepting a personal loan, and review terms carefully.

Timothy Moore covers banking and investing for The Penny Hoarder from his home base in Cincinnati. He has also worked in editing and graphic design for a marketing agency, a global research firm, and a major print publication. He has worked in the field since 2012 and has covered a variety of other topics, including insurance, taxes, retirement, and budgeting.