How Long Does It Take to Get Approved for a Personal Loan

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Last Updated:Nov 04, 2024

How Long Does It Take to Get Approved for a Personal Loan

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Here you are, looking to take out a loan, but there are a zillion questions in your head. You may ask, “How long does a personal loan take to get approved?” Well, there is a short answer and a long one. The short answer is that depending on the loan provider and what you want the loan for, it can take one day to get approval, though most lenders aren't that efficient, so expect it to take two to five business days, if not more.

If you want to know more about what you need to get approval for a loan and how it will take for every type of lender, which is the long answer, keep reading.

In this article

Time for approval by lender type

There are many different ways to go about getting a personal loan, so let's look at the most common types of lenders, how long their approval process is, and what you need to do to get that approval.

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Online loan provider

Online lenders sometimes get your loan approved on the same business day you applied for it. However, the time it takes to get approval and funds can be delayed by several factors, like incorrectly filled-in information or something missing from your application.

Furthermore, with most online lenders advertising same-day funds transfer, you have to be aware that said transfer will also depend on your bank and how fast it can process the transfer of funds. Even if you get approved and the money is sent on the same day, you may not see it in your account for two or more business days.

Direct bank loan

Getting a loan directly from your bank is a good option, mainly because you will likely have access to better interest rates if you already have an account with them. The approval time for most banks is 1–3 business days, with the funds entering your account in three or more business days.

Most banks will take a little longer to process things compared to online lenders, and if you don't make a payment in time, they can take the money directly from your account, depending on the loan agreement. Furthermore, banks have much stricter credit requirements, which may make it harder for you to get approval on a personal loan if your credit score is imperfect.

Credit union

It’s pretty standard for local, regional, and federal credit unions to offer personal loans. Like with banks, it takes 2–3 business days to get approval for a loan, and the time for funds to get to your account is three or more business days.

Most credit unions will require you to be a member to be eligible for a loan, and the majority of them don't offer loans to new members. However, once you are a member and gain eligibility to take out a loan, things can move pretty quickly.

Furthermore, unlike banks, which shareholders own, credit unions are member-owned and offer better customer support. Credit unions are also more forgiving regarding their credit requirements and will still provide reasonable interest rates for their loans.

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If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
With personal loan interest rates rising, now could be a great time to find a personal loan. Through our partner AmONE, you could get matched to a lender who could offer as much as a $50k loan with rates as low as 5.99% APR.
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How to make the process of applying for a loan easier

Now that you have chosen which loan provider you will be using, let's talk about the preparations to ensure that this process is relatively stress-free (as much as possible) and smooth throughout.

Finding the right online lender for you

If you choose to go with an online loan provider, doing your due diligence and researching online lenders is the most important step of this process. Once you find the online lender you think is right for you, you can take advantage of their faster approval process and potentially get the funds you need very quickly.

Make sure you check your credit report

All your previous loans and their positive and negative outcomes will be on your credit report. It is 10 years for your positive transactions, i.e., all the debts you've settled on time, and seven years for all the negative ones, like missed payments and defaults.

Furthermore, knowing your credit score will immensely help you narrow down what lender to choose, especially if you decide to get a loan from a bank.

Have all your documents in order and ready to go

There are some documents you will need when applying for a personal loan: the application form, proof of identity documents (birth certificate, ID, passport, etc.), income proof and employer verification, and proof of address.

Having all of these prepared and ready to go when you are ready to apply will make things a lot easier for you. If you’re well-organized, the approval process will be faster for your lender.

Apply for prequalification

Prequalification is a preliminary step in getting a loan. In this step, your loan provider will gather basic financial information about you and run a soft credit check. Once this is done, you will receive an estimated loan amount and interest rates.

Not all lenders offer prequalification. However, those who do may allow you to apply for and receive a loan within a week after prequalification and estimates. Prequalification can also help you decide what lender to go to if you get varying interest rates.

Read your application, then read it again

When applying for a loan and getting rejected, the fault can be found in the application. Incomplete or incorrect information is the quickest way to deny your loan application. So, reading the application and verifying all the information is included and correct is vital to getting on the right track for acquiring a personal loan.

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Avoid fast loans

While sounding like a good idea and maybe something to look into in an emergency, fast loans are not the best option. Lenders promising immediate funds and no credit checks may sound too good to be true — because it is. For most of them, if you don't pay back what you've borrowed plus the extra charges, you will be faced with a lot of fees on top of the interest.

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