A personal loan provides you with a sum of money that you repay in fixed monthly payments over time. Whether you have an emergency expense, need to consolidate credit card debt, or want to make improvements to your home, a personal loan can help. We’ll walk you through how to compare your options, cover your alternatives, and answer your most pressing questions. With an understanding of how to get a personal loan, you can accept a loan offer with confidence and get the money you need. 

How to Get a Personal Loan

Follow these steps to get a personal loan online. 

1. Research lenders: Check lender eligibility requirements, evaluate customer reviews, and look for must-have features to narrow down your options. 
2. Pre-qualify: Many lenders offer pre-qualification, which allows you to get a rate estimate without hurting your credit. Follow the instructions on the lender’s website to pre-qualify, and make sure to get rate estimates from a few different lenders for comparison. 
3. Choose a loan: Compare APRs and terms across lenders and select the option that best meets your needs. Choose the shortest term that corresponds with a monthly payment you can comfortably afford to avoid spending unnecessary money on interest. 
4. Complete the application: Formally apply for the loan, which typically requires a hard credit check. You may need to provide documents, such as recent pay stubs and tax returns, to complete the application. 
5. Sign your loan documents: Make sure to read your loan offer carefully, and bear in mind that your final rate could differ from your estimated rate. If you’re happy with the APR and terms, sign your loan documents. 
6. Wait for the funds: Most lenders will deposit the money into your bank account. This may happen as soon as the next business day, or it could take several days. 
7. Begin repayment: You’ll typically need to start making monthly payments within 30 days, so make sure you account for debt repayment in your budget, and set up autopay so you don’t forget to pay on time. 

When Is It a Good Idea to Get a Personal Loan?

First off, there are some situations when you shouldn’t apply for a personal loan. If you can’t afford to repay the loan, or you don’t need the money, it’s not a good idea to borrow. For example, it’s generally not wise to use loan money to take advantage of a great deal on an expensive new TV. On the other hand, there are several good reasons to take out a personal loan, including:

• An auto or home repair: If you need to repair your vehicle so you can get to work, or you need to pay a contractor to fix your air conditioning in the summer, a personal loan can help with these expenses. 
• A necessary large purchase: A designer handbag or a VR headset isn't a necessary purchase—but if your refrigerator or washing machine breaks down, a personal loan can help with replacement. 
• Another emergency expense: Whether you need to travel for a family emergency or take your dog to the vet, a personal loan can provide the money you need in a pinch. 
• Debt consolidation: If you’re drowning in credit card bills, a personal loan can help you get out of debt faster. That’s because the average APR on a personal loan is 11.48%, compared to an average APR of 20.09% across credit card plans, according to the Federal Reserve. 
• Financing a vehicle: In most cases, secured auto loans come with lower interest rates and are preferable when buying a car. But if you don’t have a down payment, you’re buying a used car from an individual, or the car doesn’t qualify for traditional financing, a personal loan can make sense. 
• Paying for a wedding: While it’s always better to save for a wedding or get married on a budget, the average cost of a wedding was $30,000 in 2022, according to The Knot. If you need help with the expense, using a personal loan to pay for a wedding may be a good option, assuming you can get a low rate. Just make sure to budget for repayment. 

What You Need to Get a Personal Loan

To qualify for a personal loan, you’ll ideally need the following:

• Good credit: To qualify for the best rates, you’ll need excellent credit. But some lenders use alternative underwriting data and are open to poor-credit borrowers. There are even personal loans that don’t require a hard credit check, but beware of the high interest rates on these loans. 
• A solid payment history: Lenders look at your payment history, which makes up 35% of your credit score, for red flags. Missed or late payments show you have difficulty managing debt, and may result in a denial or a higher rate on a personal loan. 
• A low debt-to-income ratio: Lenders check to make sure you’re not overextended by checking your debt-to-income ratio, which can be calculated by dividing your monthly debt payments by your monthly gross income. Most lenders prefer a DTI below 36%.
• Proof of income: You’ll need to show that you have a stable and consistent source of income to get a personal loan. Some lenders have minimum income requirements. You’ll likely need to provide information about your employer, along with documents such as W-2s, pay stubs, and tax returns. 
• Proof of identity and address: Aside from your Social Security number, you may need to provide a copy of your Social Security card or driver’s license. You may also need to provide address verification, such as utility bills. 

Choosing a Personal Loan

When comparing personal loans, consider the following factors.

• Eligibility requirements: Some lenders may have minimum credit score or income requirements that could disqualify you. 
• Rates and fees: Consider the interest rate as well as the origination fee, if any. The APR includes both interest and fees, expressed as a percentage of the loan amount that you’ll pay each year, so it’s helpful for comparing lenders. You should also pay attention to late fees, and avoid lenders that charge prepayment penalties. Some personal loans for excellent credit borrowers are fee-free. 
• Customer reviews: Look at customer reviews on third-party sites like Trustpilot, ConsumerAffairs, and the Better Business Bureau. A few negative reviews are to be expected, but repeated complaints about the same issue may be cause for concern. 
• Funding time: Consider how quickly you need the money. Some lenders offer next-day loans, while others may take several days or even weeks to distribute the loan funds. 
• Poor-credit options: If you’re planning to apply with a co-signer or want to put forth collateral to improve your approval odds, make sure the lender you choose offers those options. 
• Discounts: Some lenders may offer relationship discounts, Autopay discounts, or other savings opportunities. Make sure to factor these in when comparing rates. 
• Digital tools: Some lenders offer mobile apps, calculators, and other resources to help with loan management. Consider whether these features are important to you. 
• Payment flexibility: Some lenders are more flexible than others, allowing you to change your due date if you need some wiggle room. Pay attention to these features. 

Applying for a Personal Loan

Applying for a personal loan is relatively straightforward, but some lenders have easier processes than others. For example, some lenders may not offer a pre-qualification process. Others may require you to upload several documents to formally apply. If you look for lenders that offer a quick rate estimate and use AI to process your application, you can avoid some headaches. 

Alternatives to a Personal Loan

If a personal loan doesn’t seem like the right fit or if your application is denied, there are some alternatives you can consider.

• Home equity loan or HELOC: Home equity loans and home equity lines of credit allow you to borrow against the equity in your home. Since they’re secured by your home, they may be easier to qualify for and typically come with lower interest rates than personal loans. But they also come with closing costs, and you could lose your home if you can’t repay the loan. It’ll also take longer to get your money. Home equity loans and HELOCs are best for homeowners with plenty of equity seeking a large loan. 
• 0% introductory APR credit card: Some credit card issuers offer a 0% APR promotional period lasting between six months and 21 months. You’ll need good credit to qualify, but these cards can help fund a large purchase or repair and give you time to pay off the balance interest-free. Just make sure you make the minimum payments on time and pay off the balance in full before the promotional period ends. Otherwise, you could get stuck with a high interest rate. 
• Life insurance policy loan: Life insurance policy loans are only available on permanent life insurance policies that have sufficient cash value, but they don’t require proof of income or a credit check. Just make sure to make regular payments to avoid a policy lapse.
• 401(k) loan: Borrowing against your 401(k) is another way to get a loan without a credit check, but avoid this option if you’re planning to leave your job. In that situation, you may have to repay the loan all at once to avoid tax consequences. 
• Crowdfunding: Crowdfunding is a great way to ask family and friends for help in a time of need. It’s especially well-suited to people who have veterinary or medical bills, since most people are understanding about these financial needs. and are two options. Crowdfunding can be a solution when you don’t have the means to repay a loan. 
• Family loan: Loans from your family don’t require a credit check. Your family member will likely offer you the loan without interest or with a low interest rate, and you’ll have more flexibility with repayment. This is often the best option for borrowing money, assuming you have a friend or family member with the means to help.