How Long Does It Take To Get A Loan

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

Life has a way of throwing curveballs sometimes. If you need money quickly to cover an unexpected expense, you might turn to a personal loan.

Applying and getting approved for a personal loan can be a fairly quick process, depending on certain factors and 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.

Here's a look at the process of applying for a personal loan and how long you can expect it to take.

How long does it take to get a personal loan?

The length of time it takes for you to get approved for a personal loan and receive your funds can vary from as soon as the same or next business day to a week or more.

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.

With Credible, you can compare personal loan rates from various lenders in just a few minutes.

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 are non-traditional banking institutions; they 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 products and lower interest rates. But this usually means you can't visit a local branch if you have a question or want to make a payment on your loan 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.
When funds get disbursed — 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 (also a Credible partner) can fund your loan by 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. Note 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 varies.
Time to get approved — While certain institutions can review your application in a day, some banks will take several days to review and approve applications.
When funds get disbursed — Both banks and credit unions may be able to fund your personal loan the same day you're approved, as is the case with lenders like Alliant Credit Union and Navy Federal Credit Union. Depending on the institution you choose, though, this could take one business day or several.

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 it's already familiar with you and 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 and traditional banks or credit unions, other places to look for a personal loan include non-traditional 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 non-traditional loans are generally secured. 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.

Finance charges on payday loans can equate to an annual percentage rate, or APR, of anywhere from 390% to 780% — a far cry from the APR ranges you're likely to find with a traditional personal loan. In addition to origination fees and other costs, car title loans have average monthly finance charges of 25% or higher, which equates to an APR of 300%.

These loans also offer shorter repayment terms, often just a few weeks or months. If you're unable to pay off the debt in time, you'll need to renew or roll over your loan, which can result in compounded interest charges and additional fees.

Prepare ahead of time for quicker approval

Preparing ahead of time before you apply for a personal loan can help improve your chances of getting the loan and in a shorter time frame.

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 the scoring model 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 immediately.

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 with multiple lenders.

Platforms such as Credible only require you to enter your information once before running a soft credit check (this doesn't hurt your credit score). You can then get pre-approved and check rates from multiple lenders at one time, all in one place.

Credible makes it easy to compare personal loan rates.

Complete the application

Once you have an idea of which lender is best for you, it's time to officially apply. This does trigger a hard credit inquiry, which will be reported on your credit and may temporarily lower your score by a few points.

Once you apply, your lender will give you a loan decision and if you're approved, can begin disbursing your loan 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.