How long does it take to get a loan? Tips to speed the process

You may be able to get a personal loan in as little as one business day after you apply. However, not every lender has a streamlined process. For most personal loans, you can expect it to take two to five business days — or longer.

If you’re in a pinch, an emergency loan will likely be the quickest option. The timeline will ultimately depend on the lender, your finances and your banking institution.

How long each step takes

There are three main steps to getting a personal loan: the application process, approval and funding. Each step takes a different amount of time depending on the lender you’re working with. Remember, it’s important to compare rates to ensure you’re getting the best deal before you choose a lender.

Application

While each lender has its own approval requirements, nearly every application requests the same types of information.

To speed things up, have personal and financial documents like your W-2s, driver’s license or other identification, most recent federal tax return and bank statements on hand when you apply.

After gathering these documents, you should be able to apply for a personal loan within just a few minutes.

Approval

If a lender allows you to prequalify, you’ll likely know the status of your application within minutes. That’s because lenders offering this feature typically use automated underwriting for approvals instead of relying solely on loan officers to decide.

With automated underwriting, software looks at your application and credit report information. If it determines you match the lender’s requirements, you’ll usually get a conditional decision almost instantly. However, an official offer will still hinge on verifying the application information, which can take a day or two.

The process can take a few extra days if a lender only uses manual underwriting. This is because a person reviews your information and compares it against the company’s underwriting standards.

Funding

If approved, funding generally takes two to five business days.

Some online lenders promise same-day or next-day funding. Smaller banks and credit unions may take longer, but most should be able to fund your loan within a week of applying if you opt for direct deposit into a bank account.

Your bank may also slow things down. Even if your lender can fund your loan the same day you apply, your bank — or other financial institution — may take longer to make your loan funds available. Asking for a check instead of direct deposit will also lead to slower funding.

How long it takes to get a personal loan by lender type

Most loan applications only take a few minutes to complete, and funding can be delivered electronically to your bank account within one to three business days. But the exact timeline depends on the type of lender you work with and its underwriting process.

Online lender

• Approval time: Typically same business day.
• Funding time: Same day to three business days.

Most online lenders will fund your loan within three business days of approval. That said, the process may take longer if there’s any inaccurate information or something missing from your application.

Same- and next-day funding are commonly advertised. However, both rely on when you apply and how your bank processes deposits. Even if you are approved, and funds are sent that same day, you may not see the money in your account for two or three more business days.

Bank

• Approval time: One to three business days.
• Funding time: Three or more business days.

Some banks offer personal loans with quick prequalification and funding. You may also have access to better interest rates if you already have a checking or savings account with the institution. That said, if you fall behind on payments, the bank could automatically take the funds from your checking account, depending on your loan agreement.

Many banks take longer to process applications and fund loans than online lenders. They also have more stringent credit requirements. That can make it harder for you to qualify if you have imperfect credit.

Credit union

• Approval time: One to three business days.
• Funding time: Three or more business days.

Federal, local and regional credit unions often have personal loans. As with banks, funding is not as quick as online lenders. And if you aren’t already a credit union member, you must apply for membership first. Some credit unions don’t let new members take out loans right away.

Despite that, a credit union can still be relatively quick if you already have an account and can receive a direct deposit. Otherwise, picking up a check and signing loan documents in person can add a few days to the process.

That said, credit unions tend to be more lenient with their credit requirements than most banks while still offering highly competitive interest rates. Unlike banks, which are owned by shareholders, credit unions are member-owned. They may offer better customer support than banks.

Tips to speed up the personal loan approval process

The key is to be prepared before you apply. Lenders are generally able to process applications quickly thanks to underwriting technology. This means that the major slowdowns will be caused by not knowing your finances or applying with a lender you don’t qualify for.

• Find online lenders: Opting for a lender that provides an online application process also often leads to quicker approval times.
• Check your credit report: Knowing your credit score and ensuring your credit report is accurate will help you narrow down your lenders and avoid rejection, speeding up the process.
• Prepare your documents: To speed up the personal loan approval process, you should prepare your verification documents in advance. Keeping everything organized can expedite the lender’s process of reviewing your loan application.
• Apply for prequalification: Some lenders that offer prequalification can let you know if you qualify within minutes of submitting an application. And while it does vary by lender, you will likely be able to apply and receive your loan within a week.
• Review the application carefully: Regardless of the lender type, make sure the application is filled out completely and accurately. An incomplete or incorrect application can lead to your loan being denied — or at the very least, slowed down.

Fast loans that should be avoided

Short-term and payday lenders often attract borrowers with promises of immediate funds and no credit checks. However, unless you can manage to return the borrowed amount and pay high finance charges by the due date — usually your next payday — you might find yourself with steep fees.

Unlike the APR on a personal loan, the typical payday loan has an APR in the triple digits. That’s why they are often considered as financially risky.

Car title loans, another form of quick cash borrowing, should also be avoided if possible. Despite slightly longer repayment periods than payday loans, they still impose steep interest rates and fees. Even worse, defaulting on a car title loan could lead to the lender repossessing your vehicle.