How to Apply for a Personal Loan in 5 Easy Steps

Sometimes the need for additional funding arises. Whether you’re trying to consolidate debt, get married, make a big move, or need emergency cash assistance, a personal loan can help you meet your objectives without getting into deep financial trouble. Here are five easy steps to applying for a personal loan.
Woman receiving cash personal loan

1. Assess Your Creditworthiness

Your credit score is an important factor in qualifying for a personal loan and getting the lowest interest rates possible. You can obtain your credit score through a free site like Credit Karma to see where your score falls: 

  • 720 and higher: Excellent credit
  • 690-719: Good credit
  • 630-689: Fair or average credit
  • 300-629: Bad credit

2. Understand your options

Once you know your credit score, you can get a pretty good idea of what types of interest rates and payment amounts for which you may qualify. You can enter your information into an online personal loan calculator to understand what the terms of your loan might look like, including interest rates and payments. In general, you may expect to see the following interest rates by credit score
Credit ScoreAverage Personal Loan APRs
Excellent (720 – 850)10.3% – 12.5%
Good (680 – 719)13.5% – 15.5%
Average (640 – 679)17.8% – 19.9%
Poor (300 – 369)28.5% – 32.0%

3. Pre-qualify for a loan

Pre-qualifying for a loan gives you an opportunity to see some of the more specific offers for which you might be eligible. Pre-qualification usually involves a soft credit check, where online lenders will check your credit without impacting your credit score.  Be prepared to provide the following information to pre-qualify for a personal loan:

  • Social Security number
  • Monthly debt obligations (car payments, other loan payments, etc)
  • Income
  • Personal information (address, email, phone number, date of birth)
  • Employer information
  • Previous addresses

4. Compare options

Always explore additional options for securing funds. If you have good credit, you may qualify for a 0% credit card. This type of credit card offer usually has generous introductory terms (like 0% interest) that last for a specific period of time (usually six months or one year). If you need a short-term loan that you will be able to repay within that time frame, a credit card may be a good option.

Those with less-than-stellar credit may be able to obtain more favorable interest rates via a secured loan, though these typically require collateral like a savings account or a car. For homeowners, a home equity line of credit can also be less expensive than unsecured loans. 

5. Apply for a personal loan

Once you’ve done your homework and chosen the best option for your needs, you’ll need to apply. If you’ve chosen the personal loan route, you can usually submit an application online. If you choose to take out a loan from a bank or credit union, you may need to submit a paper application at your local financial institution. Expect to provide the same type of information required for a pre-qualification. 

A personal loan can be a good way to consolidate debt or cover costs that arise. Understanding your options is an important element of the process and can help ensure you find the most favorable terms for your specific situation.

4 thoughts on “How to Apply for a Personal Loan in 5 Easy Steps”

  1. There’s not a loan company that has a applications for people that work cattle or farm/ranch jobs. They won’t to know when you’re next pay day is there isn’t one when I can’t fix my truck. No one understands my job and situation, they are only set up for people who work in the city with forty hour checks.

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