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How Hard Is It To Get a Personal Loan?

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Is it hard to get a personal loan? The answer depends on what you mean. 

Applying for a personal loan is relatively fast and easy, especially online. However, individual borrowers may have difficulty qualifying for a personal loan if they don’t meet a lender’s minimum credit score or other requirements. 

Let’s look deeper into the easy and hard parts of the personal loan application process and how you can improve your shot at getting some extra cash in your pocket.

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How Hard Is It To Apply for a Personal Loan?

While researching lenders and organizing paperwork may take some time, applying for a personal loan can be a simple process. You also don’t have to worry about how long it takes to get a personal loan – applications are usually approved or denied within a few business days. Some may even be approved on the same day.

Here are the most important steps in the process:

Choosing a lender

The length of this step depends on how thoroughly you’d like to search for and compare lenders. While you may be tempted to apply with the first lender you find, it’s always wise to dive deeper to find the best deals. 

The first decision is whether you’d like to apply online vs. in person. Some people like the brick-and-mortar feeling, but applying online gives you a wider range of options to choose from quickly. 

No matter how you choose, compare each lender’s loan offerings using the loan’s annual percentage rate (APR). APR measures what your lender charges you to borrow every year, including the interest rate and any additional fees they may charge. This gives you more insight into the actual cost of the personal loan than you would have with just the interest rate.

Gathering paperwork

Gathering paperwork isn’t the most fun part of the process, but supplying the correct information the first time you apply will make the process much faster. 

The paperwork you need includes the lender’s application form, two forms of official identification, proof of income and proof of address. This step can be quick and easy if you have all of this information filed away where it is easy to find.

Filling out the application

Once you have the paperwork organized, completing the loan application is a piece of cake. The application form will typically ask for personal information such as your name, date of birth and Social Security number. It may also ask for some information on the paperwork you collected. 

With all your paperwork in hand, you should be able to fill out the application in a few minutes.

Receiving funds

Your application will typically be approved or denied within 2 – 3 business days. And you may be surprised how quickly you receive funds if you’re approved. 

If you need money even faster, some lenders specialize in same-day application approval and funding. Once approved, you could receive funds within a single business day.

How Hard Is It To Qualify for a Personal Loan?

While applying is relatively easy, qualifying for a personal loan can be difficult if you don’t meet the lender’s specific requirements. These include all of the following (and sometimes more):

Credit score

Your credit score is essential to your personal loan application. Personal loan lenders typically require borrowers to have a credit score of roughly 640 or higher, but each lender’s requirement may differ. 

There are lenders that focus on giving personal loans to borrowers with bad credit or even no credit history at all. However, these types of personal loans will come with much higher interest rates.

Debt-to-income (DTI) ratio

Your debt-to-income (DTI) ratio measures how much of your monthly income you spend on monthly debt payments. Lenders use this information to decide whether your existing debt makes it too difficult for you to take on more debt. Generally, lenders want you to have a DTI of no more than 36%, though some may allow higher.

Income and employment history

Having a steady income and consistent employment history makes qualifying for a personal loan much easier because lenders can see you have the cash flow to repay the loan. However, it is still possible to get a personal loan without a job. You may have to pay a higher interest rate, but certain lenders don’t have a minimum income requirement for a personal loan.

Self-employed people may also have to provide more information about their income in their application since they are viewed as riskier than borrowers with a steady full-time paycheck. 

Loan amount

The bigger the loan amount you request, the harder it is to qualify for a personal loan. Lending a large amount of money is naturally risky for the lender, so they generally keep personal loans to smaller amounts.

Secured vs. unsecured loan options

Deciding whether to apply for a secured or unsecured personal loan will make a big difference in how hard it is to qualify and what rate you’ll qualify for. 

Personal loans are usually unsecured, meaning you don’t have to offer collateral to receive the funds. This makes it riskier for the lender and, therefore, harder to qualify for. 

A secured loan comes with lower interest rates and is easier to qualify for because you provide a valuable asset as collateral. This means that if you fail to make payments on the loan, the lender could seize your collateral to recoup their losses.

How To Improve Your Chances of Getting a Personal Loan

If your personal loan applications have been denied in the past, you can improve your chances with these strategies:

Improve your credit score

Improving your credit score is a solid long-term strategy to increase your chances of getting approved for a personal loan. 

Reporting errors in your credit report is one way to improve your credit relatively quickly, but significantly increasing your credit score may take some time. If you focus on paying down high-interest debt and building a consistent history of on-time payments, you can bring your credit score to an acceptable level for more lenders.

Add a co-signer

A faster way to improve your chances of getting a personal loan is to get a co-signer with excellent credit. This is a risk for the co-signer since they will have to make the payments on the loan if you cannot. However, if you have a trusted partner who is ready to cosign, you can significantly improve the quality of your application. 

Apply for a smaller loan amount

As the saying goes, you can’t always get what you want. If a lender denies you for a personal loan, try applying for a smaller loan. With less money at risk, a lender may be able to qualify you for your loan. 

Final Thoughts on Whether It’s Difficult To Get a Personal Loan

Applying for a personal loan is fast, simple and straightforward. Whether or not you get approved for that loan may be more complicated, but don’t let that discourage you. You can get a personal loan even if you have a lower credit score and low income. 

Before you apply, make sure to carefully organize and analyze your finances so you can make the right decision on whether a personal loan is right for you.

See What You Prequalify For

Get prequalified offers for personal loans from Rocket LoansSM within seconds. Like what you see? Same-day funding is available.

Checking your options won’t affect your credit score.

The Short Version

  • The application process to get a personal loan largely depends on how much time you want to spend researching lenders and how organized your paperwork is
  • Qualifying for a personal loan can be difficult if you have bad credit or lots of existing debt, but it’s not impossible
  • To improve your chances of getting a personal loan, try to increase your credit score, lower your debt or find someone with excellent credit to be a cosigner
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