How long does it take to get a personal loan?

If you’re applying for a personal loan, understanding the funding time frame for different lenders can help you plan. Learn more here. (iStock)

Life has a way of throwing curveballs when you least expect it. If you need money quickly to cover a sudden expense, you might turn to a personal loan. 

Applying and getting approved for a personal loan can be a fairly quick process, depending on the lender you choose. While some loans could take weeks to fund, others only require days. Understanding the funding time frame for different lenders can help you plan when applying for a personal loan.

Credible makes it easy to compare personal loan rates from various lenders in just a few minutes.

• How long does it take to get a personal loan?
• Other ways to get a personal loan
• Prepare ahead of time for quicker approval

How long does it take to get a personal loan?

The amount of time it takes to get approved for a personal loan and receive your funds can range from as soon as the same or next business day to a week or more, depending on the lender.  

Where you bank can also affect how quickly you receive your loan. Once your lender sends the funds, your bank will process and post the money to your account. Some banks do this fairly quickly, while others may add a few days to your disbursement time frame.

If you get a loan through a credit union, you can typically expect to receive your funds within one to five business days. Some credit unions, such as PenFed, may be able to release your loan funds as soon as two business days after approval.

Online lenders: Typically less than 5 days

If you’re looking to get a personal loan quickly, an online lender might be the best option.

Online lenders may operate entirely online or as an arm of a traditional banking institution. Many online lenders don’t have brick-and-mortar branches, which saves them overhead costs and often allows them to provide competitive lower interest rates and better terms than traditional banks. But this usually means you can’t visit a local branch if you have a question or want to make a loan payment in person.

An online lender’s digital application process may be ideal for tech-savvy or on-the-go borrowers, but online lenders may not be right for those who prefer a paper or in-person loan application.

• Time to apply — Applying usually takes minutes. You’ll need to provide personal information, such as your address, driver’s license number, Social Security number and proof of income.
• Time to get approved — Approvals can be instant in many cases, if no additional information is needed, or might take just a few hours.
• Time to get funds — You can generally expect funding as soon as the same business day or as long as five business days from approval.

The time it will take you to receive a personal loan from an online lender depends on your application and financial details, when you apply, whether more information is required, and how fast your bank processes the transfer. 

For example, Credible partners LightStream and OneMain Financial can fund loans as soon as the same business day that you’re approved. And if you’re approved by 4:30 p.m. Central time on a weekday, Avant can fund your loan as soon as the next business day.

You can compare personal loan rates using Credible without affecting your credit score.

Banks and credit unions: 1 to 7 days  

Both traditional banks and credit unions offer personal loans to borrowers. These institutions often have brick-and-mortar branch locations, which can be ideal if you prefer to apply or manage your account in person. Keep in mind that if you’re applying for a loan from a credit union, you’ll need to be a member in order to qualify. 

You may be able to apply online, though some financial institutions might require you to apply in person at your local branch. After submitting your application, the bank or credit union will review your information — which usually includes looking at your income and credit score — before making a decision. 

• Time to apply — The application process varies from one institution to the next, so the time it will take to complete an application can vary depending on the institution’s application requirements..
• Time to get approved — While certain banks and credit unions can review your application in a day, some may take several days to review and approve applications.
• Time to get funds — Some banks and credit unions may be able to fund your personal loan the same day you’re approved, while others may take up to a week.

If you already have a checking or savings account with a particular bank, it might be a good idea to apply for a loan through your bank first. Since they’re already familiar with your financial habits, it might be easier to get approved. 

You might also qualify for interest rate discounts or have a faster application process. Banks like Wells Fargo, for example, disburse funds as soon as the next business day after approval.

Other ways to get a personal loan

Outside of online lenders and traditional banks or credit unions, other places to look for a personal loan include nontraditional products, like payday loans, pawn shop loans or even car title loans. But these types of loans should only be considered as a last resort. 

These nontraditional loans are generally secured, meaning you’ll be required to provide an asset as collateral on the loan, such as your car, jewelry or even a savings account.

But these types of loans will cost significantly more in the long run — thanks to high interest rates and potential fees — and can trap borrowers in a vicious cycle of debt. If you can avoid one of these products, do so at all costs.

Payday loans

Time to fund: As soon as the same day of approval

Payday loans are short-term, high-interest loans, usually for $500 or less. You can receive your funds for a payday loan as soon as the same or next day of getting approved.

Payday loans are usually due as soon as two to four weeks after origination and hold your next paycheck as collateral. These loans can be attractive to borrowers who need funds fast, but they come with extremely high interest rates — often as high as 400% APR.

Car title loans

Time to fund: As soon as the same day of approval

Car title loans, otherwise known as title loans, are short-term loans that typically last for 15 or 30 days. Title loans use your vehicle as collateral and are usually for amounts that range from 25% to 30% of your car’s value. You can usually receive your funds for a title loan as soon as one day of getting approved.

To get a title loan, you’ll hand over your vehicle’s title to the lender and won’t receive it back until you repay the amount you borrowed plus finance charges and any fees. Car title loans have average monthly finance charges of 25% or higher, which equates to an APR of 300%. But if you’re unable to repay your loan, the lender can repossess your vehicle.

Pawn shop loans

Time to fund: As soon as the same day of approval

To get a pawn shop loan, you’ll have to put up an item, such as a piece of jewelry or a TV, as collateral. The pawn shop will assess the item you bring in and give you a loan ranging from 25% to 60% of the item’s appraised value. If you’re unable to repay the loan, the pawn shop can keep and resell your collateral.

Pawn shop loan terms typically range from 30 to 60 days and often include financing charges that can equate to as high as 152% APR. You can receive your funds for a pawn shop loan as soon as the same day of getting approved.

Home equity line of credit (HELOC)

Time to fund: Two to six weeks

A home equity line of credit, or HELOC, is a revolving line of credit that’s secured with your home as collateral.

You can borrow as often as you need up to your approved credit limit during the draw period. The draw period usually lasts five to ten years, and during this time, you can make monthly interest payments on the credit you’ve borrowed. When the draw period ends, your credit line will be closed, and you’ll typically have 20 years to repay your loan balance.

The time it takes to receive your funds can range anywhere from two to six weeks, depending on your lender. Keep in mind that because your house is used for collateral, you risk losing your home if you default on payments.

Prepare ahead of time for quicker approval

Preparing ahead of time before you apply for a personal loan can improve your chances of getting your loan approved and funded quickly.

Here are some tips to help you get prepared to apply for a personal loan:

Gather financial documents and identification

Lenders will typically require you to provide certain financial information as part of the application process. Here are some documents to gather ahead of time: 

• Recent pay stubs
• W-2s or 1099s from previous years
• Your last two tax returns
• Bank statements

Review your credit score

It’s a good idea to know where your credit stands before you apply for a personal loan. You can request a free credit report each year from all three main credit bureaus (Equifax, Experian and TransUnion). You can also request a credit score from each, though their scoring models may differ from the one your lender uses.

Look through your credit reports carefully to check for any errors, such as accounts not belonging to you, reported late payments that were actually made on time, and erroneous account balances. If you find errors, dispute them with your creditor and the bureaus to potentially boost your credit score.

Shop around to find the best rates

The best way to find the most competitive interest rates — and potentially save yourself hundreds or thousands of dollars in interest — is to shop around and compare rates with multiple lenders. 

Credible makes it easy to compare rates from multiple lenders, all in one place.

Complete the application

Once you have an idea of which lender is best for you, it’s time to apply. When you submit an application, the lender will perform a hard credit inquiry, which will be reported on your credit and may temporarily lower your score by a few points. 

The lender will review your application and return to you with an approval decision. If you’re approved and choose to accept the loan, the lender will then begin the process of disbursing your funds. 

Apply sooner rather than later 

The sooner you apply for your personal loan, the sooner you may be able to get approved and have funds in hand. Applying early in the morning, for example, can better your chances of getting cash deposited that same afternoon or the next day. If you apply later in the week, you may find yourself waiting until after the weekend to receive your funds.

Whether you’re looking to cover a large expense or need cash quickly, personal loans can be a necessary financial product. By choosing your lender carefully, you can ensure that you find the best possible rate and fastest disbursement time frame for your situation.