Unlike other types of financing, personal loans have some of the fastest approval and funding times. While the time it takes to get a personal loan can vary by lender, borrowers can get funds as soon as the day they apply, or it can take several business days. There are a lot of factors at play, and no single timeline applies to everyone.
However, if you understand what typically causes delays, you can potentially speed up how long it takes to get a personal loan.
- The time it takes to receive a personal loan varies by lender, with online lenders typically offering the fastest turnaround times (even the same day).
- Submitting the required documents and responding to all questions can speed up the loan approval process.
- Apply early in the day for fast approval and funding for online lenders offering same-day disbursement.
- Choose lenders with automated underwriting to speed up your application’s processing and approval.
The Typical Personal Loan Timeline For The Average Borrower
The borrowing timeline takes part in three phases: application, approval and funding/disbursement.
Application
When you apply for a loan online, the process is much faster than it used to be. However, before you even apply, many lenders offer prequalification to give you an estimated rate without performing a hard credit inquiry. A soft inquiry doesn’t hurt your score, whereas a hard inquiry can drop your score by about 5 – 10 points.
If the prequalification shows you a rate you like and you decide to move forward with the application, the whole process should take only a few minutes. Many lenders have automated the application process, so it’s very fast.
If the application isn’t automated, you’ll need to provide your Social Security number and the following:
- Bank account information
- W-2 forms
- Federal tax returns
- Government-issued ID
- Recent pay stubs
- If self-employed, documentation of income
The requirements for a personal loan can vary, so some applications may not be as intensive as others.
Approval Process
Certain lenders are faster at approving loans than others. Online lenders, for example, can sometimes do it in less than an hour. Banks and credit unions can be just as fast, but the process may take up to a week.
It depends on what type of underwriting process is in place. Lenders that rely on automated underwriting are able to approve or decline loan applications very quickly. Those who do not may take considerably more time.
What information do underwriters look at?
When approving a loan application, underwriters review the following information:
- Credit score: The higher your credit score is, the more trustworthy you’re perceived by a lender. Borrowers with strong credit scores are also more likely to be awarded lower interest rates.
- Debt-to-income ratio: How much debt do you have in comparison to your gross monthly income? Lenders typically prefer a debt-to-income ratio (DTI) below 36%.
- Payment history: Do you have a history of on-time payments?
- Income consistency: Do you consistently make enough money each month to cover your debts? And is your income documented?
- Collateral (for secured personal loans): Assets, such as savings, a car or a house, may sometimes be required to secure the loan and lock in a low rate. While securing a loan may save you money in interest, the collateral used may be seized by the lender if you default on the loan.
Funding And Disbursement
Depending on the lender, you could receive your funds on the same day you’re approved, the next business day or a week or later. Sometimes it’s not the lender that causes a delay, but rather external factors such as ACH processing times.
Same-Day Funding Explained
How long does personal loan approval take? Approval and funding can happen the same day if you work with the right lender.
However, same-day funding comes down to a few variables, usually spelled out in the fine print. For example, there are cutoff times for ACH same-day transfers. If you submit your application after a certain time, you may need to wait until the next business day. However, if you submit your application in the morning, you have a good chance of receiving those funds the same day with certain lenders.
Same-day funding also relies on submitting your information correctly and answering any questions the lender has in a timely manner. If you don’t, you may not see your funds as quickly as you anticipated.
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Who Are The Fastest Lenders?
The type of lender you choose is one of the biggest factors in how quickly you receive your personal loan funds.
| Lender Type | Typical Approval Time | Typical Funding Time | Considerations |
|---|---|---|---|
| Online Lenders | Same day to a few hours | Same day to next business day | Automated underwriting makes this the fastest option |
| Banks | Same day – 1 business day | 2 – 5 business days | Speed varies by institution; some offer same-day funding |
| Credit Unions | 1 – 3 business days | Up to 1 week | Manual underwriting takes longer but may benefit borrowers with unusual financial profiles |
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Common Variables That Affect How Fast Your Loan Is Processed
Borrowers with stronger credit may get approved faster than those with subprime credit. This is because the underwriting process tends to go a little faster if a thorough review isn’t deemed necessary.
Another variable that might slow down the process is a larger loan amount, which typically requires more documentation. If collateral is required, an appraisal is needed. All of these things take time.
Having a nontraditional job can also tap the brakes. If you’re a freelancer or are self-employed, your income will have to be assessed with more documentation.
Lastly, the lender’s technology also determines how quickly they process and disburse loans. Smaller lenders simply don’t have the ability to operate at the same speed as many online lenders.
Less Common Factors That Can Affect How Fast You Get Your Loan
Here are some items that can slow down the approval and funding process.
- Bank verification: Some banks delay loan disbursement to double-check for fraud.
- Identity verification: Internal systems can initiate random identity checks, which can slow loan funding.
- Employment verification: Lenders may choose to contact your employer directly. If it takes them time to speak with someone, you might see delays.
- Holidays and weekends: If you apply over the weekend or on a holiday, you’re likely to experience slower funding than on a normal business day.
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What You Can Do To Speed Up Your Personal Loan Approval
To speed up your loan application and approval, consider reviewing your credit report for any errors. A recent study from Consumer Reports and WorkMoney found that nearly half of consumers found errors on their credit reports that could affect their interest rates, so it’s worth your time to ensure all of the information on your reports is accurate. Check your reports for free at AnnualCreditReport.com.
As you complete your loan application, also double-check that the information you enter is correct. If time is of the essence, consider applying early in the day and using direct deposit.
The Cost Of Fast Loans
Unfortunately, borrowers looking for fast, same-day loans may expect higher interest rates, fees and penalties. Payday loans and cash advances, for example, are infamous for being predatory and having high APRs, unnecessary fees and poor repayment terms. Always compare loan terms when you’re in the market for any financial product.
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Timeline You Should Expect
Fastest Scenario
If you have a stable income, have excellent credit and are working with an online lender, you can expect a fast application and approval process. Depending on when you submit your application, you may receive same-day funding, or it will be on the next business day.
Average Scenario
If you have good credit and you’re not applying for a large amount, you can expect to receive your funding amount in about 2 – 5 business days.
Slowest Scenario
Things that will slow your application down dramatically are:
- Being self-employed
- Requesting a large loan amount
- Working through a credit union with a manual underwriter
In these scenarios, expect the loan process to take a week or longer.
FAQ
The Bottom Line: Use An Online Lender For A Fast Turnaround
How long does it take to get a personal loan? Timelines vary case by case, but if you want fast funding, online lenders are the safest bet. However, you can ensure the process goes as smoothly as possible by applying early in the day and submitting all required documents. You can also avoid unnecessary delays by reviewing your information. Delays due to applicant error are common.
Learn more about the benefits of personal loans.
Lauren Ward
Lauren Ward is a writer with over a decade of experience covering financial topics for businesses and publications. Her work has also been featured in major publications such as U.S. News and World Report, CNN, Business Insider, The New York Post and Bankrate. Her expertise includes real estate, mortgages, small business, insurance and more.
