How to Apply for a Personal Loan: A Comprehensive Guide

Whether you’re hit with an unanticipated home repair, facing a medical emergency, or trying to consolidate high-interest credit card debt, a personal loan could help alleviate the financial burden. With a personal loan, you may be able to borrow what you need and then pay it back over time with fixed monthly payments.

How to Apply for a Personal Loan in 6 Steps

The personal loan application process can differ from one lender to the next, but the steps tend to be similar.

1. Check your rate

Some lenders let you check your loan rate without submitting a formal application. At LendingClub Bank, we use information like your name, address, date of birth, income, and how much you want to borrow to see if you’re likely to qualify for a loan and provide an estimated rate. Checking your rate allows you to compare multiple potential loan offers and typically doesn’t impact your credit score.

2. Compare different loan options

When you’re reviewing different loan options, be sure to compare:

• APR: Your APR tells you how much it will cost you to borrow money, including the interest rate and fees. A higher APR means a higher total cost.

• Loan term: Generally, loans with shorter terms have higher monthly payments, but they could cost less in interest in the long run. On the other hand, longer terms may cost more over time, but the lower payments may be easier to manage.

• Fees: Some lenders charge origination fees, processing fees, or prepayment penalties. Take these potential costs into account when comparing options.

• Loan amount: Be sure to choose a loan that offers what you need and allows you to afford repayment.

• Monthly payment: Make sure to choose a loan that offers a payment plan that works with your budget.

• Lender reputation: Not all lenders are created equal. Verify their credibility with the Better Business Bureau, read customer testimonials and reviews, and make sure they have a customer service team that’s both knowledgeable and available to answer any questions or concerns.

3. Complete your loan application and verify your identity

Once you’ve decided on a lender, complete an official application. In most cases, you’ll be required to submit documentation that verifies your identity, residence, or income. This can include a photocopy of your government-issued photo ID, recent utility bills, or other documents. You can usually submit copies of the required documents from your mobile device or your computer.

4. Wait for approval

At LendingClub, most members are approved within a couple of hours. We also give you the ability to check your application status at any time.

5. Review your offer

Your actual offer may be different than what it was when you checked your rate, so take care to review the terms in detail before accepting.

6. Accept your offer and receive your funds

Once you accept an offer, funds can be deposited directly into your bank account. Most members that are approved receive their funds fast.

What to do before you apply for a personal loan

Before applying for a personal loan, take a minute to review your current finances. Having a good understanding of where you stand financially and what you need can save you time when applying for a personal loan.

Check your credit

You can request a free copy of your credit report each year from each of the three major credit bureaus. When reviewing your credit report, make sure all of your debts are current and address any late payments or past-due balances immediately. While this won’t erase the past—missed payments remain on your credit report for seven years—it can help show lenders you’re working on improving your financial situation.

You should also check for any errors in your credit report, as they can negatively impact your creditworthiness. If you do find errors, contest them immediately with one of the three major credit bureaus.

Even if you aren’t applying for a personal loan, occasionally checking your credit report for accuracy is one of the best ways to protect your credit.

Determine the amount you need to borrow

Loan amounts vary depending on the lender, but at LendingClub Bank, you can choose loan amounts from $1,000 up to $40,000.

When determining the amount to borrow, consider how much you need for your loan purpose. Remember: you’ll be paying back the total amount of the loan plus interest, so choose an amount you can comfortably afford to repay. If you aren’t sure, our personal loan calculator can help you estimate monthly payments.

Get prequalified

Most lenders allow you to check your potential loan rates online for free with a soft credit inquiry. Getting prequalified doesn’t guarantee you’ll get the loan, but it can give you a basic understanding of the loan offer you might receive. At LendingClub Bank, you can check your rate in minutes without impacting your credit score.

Consider a co-borrower

If you’re still in the process of building your credit history or working to improve your credit score, you may want to consider adding a co-borrower to your loan application. A co-borrower with a strong credit score and credit history can improve your chances of getting a loan with favorable terms.

How Your Personal Loan Application Is Reviewed

When applying for personal loans, the decision process varies. However, at LendingClub, we look at information from your application and credit report, as well as your payment history and other factors.

Credit score

A good credit score (670 or higher) is one of the key factors that all lenders use in determining whether you are eligible for a loan and the interest rate you’ll receive. If possible, work on improving your credit score before applying, or apply with a co-borrower to strengthen your chances at getting approved.

Payment history

Payment history is a significant factor in determining your overall credit score and something most lenders look at when determining loan eligibility. If you have a solid history of repaying debts on time, it gives assurance that you’ll pay this debt back, too.

Income

Income is an important factor because it helps determine how much debt you can afford to repay. Most lenders will ask to see pay stubs or tax returns to show proof of income.

Debt-to-income ratio

Your debt-to-income ratio (DTI) compares your monthly debt obligations to your monthly gross income. A lower DTI can show the financial ability to repay debt on time.

How to Apply for a Personal Loan from LendingClub Bank

To qualify for a personal loan from LendingClub Bank you must be a U.S. citizen or resident and at least 18 years of age with a verifiable bank account. (We accept applications from all U.S. states and Washington, D.C. We do not accept applications from the U.S. territories.)

Aside from reviewing information on your application, we look at your creditworthiness, credit score, and information that predicts you’ll be able to repay the loan—like your income and job history.

Applicants who qualify for the lowest rates have a high credit score, a low DTI, and a long history of successful credit lines.

The Bottom Line

A personal loan is a great way to consolidate high-interest debt or pay for an emergency or unexpected expenses. A fixed interest rate and fixed monthly payment allow for predictability which can help with your monthly budgeting.

How to Apply for a Personal Loan FAQs

Why apply for a personal loan?

You can use a personal loan for many purposes, such as consolidating or paying down higher interest rate credit card debt, tackling home repairs, or covering unforeseen medical expenses. Personal loans from LendingClub Bank come with fixed rates and predetermined monthly payments, which can save you money on interest and help improve your overall financial picture.

What credit score do you need to get a personal loan?

While it’s possible to get a personal loan with a lower credit score, a FICO score that is considered good (670–739) or excellent (800 and above) can improve your chances for getting approved. Typically, the higher your credit score, the better your chance at receiving a loan offer with a lower interest rate.

What size personal loan can I apply for?

Personal loans can range from a few hundred to thousands of dollars. But in most cases, you’ll be offered an amount based on what you can afford given the information on your application and credit report. You should also remember the more you borrow, the more you’ll pay in interest—so it’s usually best to ask for only what you need.

Will I qualify for a personal loan?

Many factors go into qualifying for a personal loan. Strong applicants will have a good credit score, proof of steady employment and income, and a low debt-to-income ratio.

Can you cancel a personal loan application?

If your loan application is approved, you’ll be sent an official offer, which you do not have to accept. If you do accept the loan and change your mind, there is often an option to cancel it, but that depends on who funded the loan. If you receive a loan through LendingClub Bank, you have five calendar days to change your mind. If you do want to cancel, make sure you keep all the money in your account—we'll try to withdraw it within 5–7 business days.

If my application is declined, can I apply again in the future?

If you’re declined for a personal loan, you’re typically welcome to go back and apply. If denied, lenders are required to send you an adverse action notice, which lists the reasons your application was declined. Review this notice and work to improve your financial situation. In some cases, reapplying with a co-borrower or asking for a smaller loan amount can help strengthen your chances of getting approved.