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To get approved for a personal loan, you must provide certain documents to your lender. These documents help prove your personal and financial information. A lender will review them before they decide whether to extend you a loan offer.
While each lender has its own unique application and eligibility requirements, many of them look for similar documentation. By familiarizing yourself with the types of documents you may need, you can prepare for the application process and increase your chances of approval.
Personal loan documents your lender may require
During the initial application and the verification process, you may have to provide your lender with a few documents. Most of the documents can be submitted electronically.
1. Loan application
Each lender will have an application to initiate the loan process, and this application can look different from lender to lender. For example, if you’re borrowing from an online lender, the application process is often done entirely online. The applications can typically be completed in person or online if you borrow from a traditional bank or credit union.
This initial application is usually basic — it will often ask for your personal information, such as your name, address, phone number, date of birth, and Social Security number. It might also require you to state your desired loan amount and loan purpose.
Some lenders will want you to include additional financial details like your gross monthly income or your monthly rent or mortgage payment. Be sure to answer each question accurately.
2. Proof of identity
Aside from obvious reasons like identity theft, lenders must be able to verify your identity to determine if you’re a United States citizen or permanent resident and if you’re at least 18 years of age. They might also want to confirm that you have a valid and active bank account. You’ll typically need to present two forms of identification, such as:
- Birth certificate
- Certificate of citizenship
- Driver’s license
- Military ID
- Social Security card
- State-issued ID
In most cases, you can make copies of your two forms of ID so that you don’t have to submit your originals to the lender. Once you do, be sure to store the originals in a safe place so you don’t misplace them.
If you’re not a US citizen or permanent resident, you may be able to qualify for a loan with select lenders if you have a valid visa and Individual Taxpayer Identification Number (ITIN).
3. Employer and income verification
Unsecured personal loans are different from many other types of loans, like mortgages or auto loans, in that there is no collateral backing the loan. This increases the lender’s risk and makes it even more important to verify that you have a steady source of income to repay the loan.
If you are traditionally employed, you can usually verify your income with the following documents:
- Tax returns
- W-2s and 1099s
- Bank statements
- Employer’s contact information
If you’re self-employed, you can usually verify your income with the following documents:
- Bank statement
- Income tax returns
To find your paystubs and tax forms, log in to your payroll provider’s online database or contact your human resources or payroll department. If you work with a CPA or other tax professional, they might be able to help you find the tax forms too. You may pull copies of your bank statements online after you log into your bank account. Don’t hesitate to contact your bank if you don’t see them.
4. Proof of address
Proof of your living situation can help a lender determine how stable your lifestyle is. You can usually use one of the following:
- Utility bill
- Lease or rental agreement
- Mortgage statement
- Proof of insurance on your home, lease/rental or vehicle
- Voter registration card
- Property tax receipt
- Bank or credit card statement
If you need a change of address confirmation, the U.S. Postal Service offers resources to help you change, and confirm, a change of residential address. While the fastest and easiest way to do this is online, you can also go to your local post office and complete a form in-person.
What if you don’t get approved for your loan?
If you don’t get approved for a personal loan, there are a couple of other options to consider:
- Get a cosigner: A cosigner adds their name to your loan application. They agree to pay off the loan plus any additional fees if you default. If you have a trustworthy friend or family member with good or excellent credit, they may help you get approved for a cosigned loan. Note that your cosigner will likely need to provide the same documents as you when you both apply for the loan. If you go this route, make sure you repay it on time to avoid damaging your relationship.
- Choose a secured personal loan: Most personal loans are unsecured, meaning they don’t require collateral like your house or car. Secured personal loans, on the other hand, are backed by collateral. The lender may seize your collateral if you fail to repay your loan. By applying for a secured personal loan, you can reduce the lender’s risk and increase your approval chances. You’ll have to show documentation proving the value of the collateral and the fact you own it.
Other information you may need
Although the lender will likely collect this information when you apply, it doesn’t hurt to have it handy if you’re asked about your credit rating or why you want to borrow the funds.
Once you initiate the loan application process, the lender will do a hard pull of your credit score, which will affect your credit. While some lenders only lend to borrowers with high credit scores, others are lenient and willing to take a chance on those with lower scores. Remember that if your credit score is on the low side, you may have to accept a higher interest rate.
While most lenders aren’t too concerned with how you’ll use the loan, understanding its purpose may help them recommend the best loan product for your needs. Some lenders offer loans for a specific purpose, like debt consolidation. Or you could apply for a personal loan to cover the cost of home improvements and upgrades, medical expenses, adoption costs, wedding fees, travel, or some other big-ticket purchase.
Some lenders will request an itemized list of your recurring monthly expenses. These include housing and utility costs, auto loan payments, insurance premiums, student loan payments and credit card payments. The sum of your expenses will be deducted from your monthly income to determine if you can comfortably afford the loan personal payment or if it could stretch your budget too thin.
The bottom line
Gathering the information and documents you’ll need before applying for a personal loan can save you a ton of time. Plus, you can minimize the chance of having to deal with application processing and funding delays. Not all lenders have the same requirements, so reach out to confirm what you’ll need to apply.