Tips for faster approval
There are two key ways you can speed up the loan process:
- Be ready to supply any required verification to the bank, credit union, or online lender processing your loan.
- When asked, provide that documentation quickly.
Each personal loan lender has a different set of requirements, but you can save time by gathering these documents ahead of time:
ID: Driver's license, passport, military ID, Social Security card, a government-issued photo ID, or certificate of citizenship (some lenders need one, while others ask for two forms of ID)
Proof of income from an employer: Bank statements, W-2 tax forms, pay stubs, income tax returns, or a letter of verification from your employer
Proof of income if you are self-employed: Bank statements, copies of past income tax returns, and 1099 tax forms
Proof of address: Voter registration card, utility bills, a lease agreement, or a mortgage contract
The loan approval process may feel like a hassle, but once you've taken care of the task, your documents are ready to go any time you need them. That means that the next time you apply for a mortgage, open a credit card, or take out an installment loan, you'll be ready.
For a detailed step-by-step guide to getting a loan, check out our guide: How to Get a Personal Loan.
Pre-approval vs. final approval
You'll notice that the terms "pre-approval" and "final approval" are both used above. These are two different things, and knowing what they mean will help you understand how personal loans work.
Pre-approval
Let's say you decide to rate shop and want to check out five different lenders. Most lenders run a soft credit check (that doesn't affect your credit score) before letting you know if you qualify for a personal loan. Once you've pre-qualified, they tell you more about the interest rate, annual percentage rate (APR), and terms. This process has no impact on your credit score, which gives you the freedom to check as many lenders as you would like until you find a loan that works for you.
Final approval
Once you've decided that a loan is right for you, it's time to let the lender know that you want to move forward. At this point, the lender runs a final hard credit check. This hard check dings your credit score slightly. Don't worry -- the ding can be erased by making your monthly payment on time for several months.
Even if a loan application is pre-approved in minutes, it typically takes from one to 10 business days to receive final approval and the disbursement of funds. If you filled out your application accurately and nothing has changed in the interim, you're only waiting for the lender to verify the information provided.
You will find one thing to be true of any loan: the better prepared you are, the easier the process will be -- and the happier you're likely to be with the outcome.
Still have questions?
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