How long does it take to get a loan?

You may be able to get a personal loan in as little as one business day after you apply. However, not every lender has a streamlined process and some financial institutions are slow to process disbursed funds. For most personal loans, you can expect funds in your account within two to five business days, but it may take longer.

If you are in a pinch, a personal loan advertised as an emergency loan will likely be the quickest option. The timeline will ultimately depend on the lender, your finances and your banking institution.

How long each step takes

There are three main steps to getting a personal loan: the application process, approval and funding. Each step takes a different amount of time depending on the lender you work with. Remember, it’s important to compare rates to ensure you get the best deal when choosing a lender.

Application 

While each lender has its own approval requirements, nearly every application requests the same types of information.

To speed things up, there are a few things you should have on hand when you apply.

• Driver’s license or other identification.
• W-2.
• Most recent federal tax return.
• Bank statements.

Make sure your information is input correctly in order to prevent any delays or the possible denial of your application.

After gathering these documents, you should be able to apply for a personal loan within just a few minutes.

Approval

If a lender allows you to prequalify, you’ll likely know the status of your application within minutes. That’s because lenders offering this feature typically use automated underwriting for approvals instead of relying solely on loan officers to decide.

With automated underwriting, the lender’s software looks at your application and credit report information. If it determines you match the lender’s requirements, you’ll usually receive a conditional decision almost instantly. However, an official offer will still hinge on the lender verifying your application information, which can take a day or two.

If a lender uses manual underwriting, you can expect the process to take a few business days. An employee must review your information and compare it against the company’s underwriting standards — and people work slower than software.

Funding

If approved, funding generally takes two to five business days, depending on how much of a loan you get and the type of lender you choose. 

Some online lenders promise same-day or next-day funding. Smaller banks and credit unions may take longer, but most should be able to fund your loan within a week of applying if you opt for direct deposit into a bank account.

Your bank may also slow things down. Even if your lender can fund your loan the same day you apply, your bank — or other financial institution — may take longer to make your loan funds available. Asking for a check instead of direct deposit will also lead to slower funding.

How long it takes to get a personal loan by lender type

Most loan applications only take a few minutes to complete, and funding can be delivered electronically to your bank account within one to three business days. But the exact timeline depends on the type of lender you work with and its underwriting process.

Online lender

• Approval time: Typically same business day.
• Funding time: Same day to three business days.

Most online lenders will fund your loan within three business days of approval, and many advertise same- or next-business-day funding. The process may take longer if your application has missing or incorrect information.

Even if you are approved and funds are sent that same day, you may not see the money in your account for two or three more business days. It depends on how quickly your bank processes deposits.

Bank

• Approval time: One to three business days.
• Funding time: Three or more business days.

Some banks offer personal loans with quick prequalification and funding. You may also have access to better interest rates if you already have a checking or savings account with the institution. That said, if you fall behind on payments and default on your loan, the bank could automatically take the funds from your checking account, depending on your loan agreement.

Many banks take longer to process applications and fund loans than online lenders. They also have more stringent credit score requirements. That can make it harder for you to qualify if you have imperfect credit.

Credit union

• Approval time: One to three business days.
• Funding time: Three or more business days.

Federal, local and regional credit unions often have personal loans. As with banks, funding is not as quick as online lenders, and if you aren’t already a credit union member, you must apply for membership first. Some credit unions don’t let new members take out loans right away.

Despite that, a credit union can still be relatively quick if you already have an account and can receive a direct deposit. Otherwise, picking up a check and signing loan documents in person can add a few days to the process.

That said, credit unions tend to be more lenient with their credit requirements than most banks while still offering highly competitive personal loan interest rates. Unlike banks, which are owned by shareholders, credit unions are member-owned. Therefore, they may offer better customer support than banks.

Tips to speed up the personal loan approval process

Lenders are generally able to process applications quickly, thanks to underwriting technology. But these tips can help you speed up the personal loan approval process so you are not plagued with delays.

• Find online lenders: Opting for a lender with an online application process typically leads to quicker approval times.
• Check your credit report: Knowing your credit score and ensuring your credit report is accurate will help you narrow down your lenders and avoid rejection, speeding up the process.
• Prepare your documents: To speed up the personal loan approval process, you should prepare your verification documents in advance. Keeping everything organized can expedite the lender’s process when reviewing your loan application.
• Apply for prequalification: Some lenders that offer prequalification can let you know if you qualify within minutes of submitting an application. While this varies by lender, you will likely be able to apply and receive your loan within a week.
• Review the application carefully: Regardless of the lender type, make sure the application completed accurately. An incomplete or incorrect application can lead to your loan being denied — or, at the very least, delayed.

Fast loans that should be avoided

Short-term and payday lenders often attract borrowers with promises of immediate funds and no credit checks. However, unless you can manage to return the borrowed amount and pay high finance charges by the due date — usually your next payday — you might find yourself with steep fees.

Unlike the annual percentage rate (APR) on a personal loan, the typical payday loan has an APR in the triple digits. That makes them financially risky. Say you take out a $500 loan with $75 in fees. If your loan is for 14 days, you will have incurred an APR of 391.07 percent. That is extremely high given that new personal loan APRs average 12.38 percent.

Car title loans, another form of quick cash borrowing, should also be avoided if possible. Despite slightly longer repayment periods than payday loans, they still impose steep interest rates and fees. Even worse, defaulting on a car title loan could lead to the lender repossessing your vehicle.

Bottom line 

Factors like the type of loan, underwriting and lender can make a big difference in how fast you receive your funds. Being prepared with loan documents can help expedite the process, but ultimately, it can take anywhere from one to five business days to receive funds. Be sure to compare personal loan rates to choose a lender that fits your budget, and beware of payday loans, which can charge absurdly high fees and APRs that can set you back more than they help.