How Do You Apply for a Personal Loan?

When you need extra cash to cover a major expense, like consolidating debt or handling an unexpected car repair, a personal loan may be a practical solution. But figuring out how to apply for one may feel overwhelming, and you may not be sure where to start.

The good news is that the process can be straightforward, and you can usually complete the application online. Let’s walk through the 6 steps to apply for a personal loan, from checking your credit to gathering your documents to submitting your application.

Step 1: Consider your funding needs and budget

First, figure out how much you need to borrow. This will depend on what expenses you want to cover with the loan. Personal loan amounts can vary widely depending on the lender, but you may need to rule out certain lenders if they don’t offer a high (or low) enough loan amount.

Because a personal loan involves paying back the amount you borrowed in monthly payments plus interest, you’ll also need to think about your budget. Consider how your personal loan payments will fit in with your other expenses going forward. A personal loan calculator may help here. Your other monthly debt payments, expenses and savings goals can also help you figure out what size loan you want to apply for.

Step 2: Check your credit

Your credit will play a critical role in whether you’re approved for a loan, and if so, what your loan amount and interest rate might be. Before you apply, you may want to request your credit report. You can request a credit report from each of the 3 major credit bureaus every 12 months, and they’re also offering free weekly reports. When reviewing your credit report, look for any errors and dispute them, which could potentially help boost your creditworthiness.

In general, a better credit score can help you get a lower interest rate. The higher your credit score, the more options you may have for lenders and loans.

Step 3: Compare different types of personal loans

Research lenders and the types of personal loans they offer. Look at their terms and conditions and policies to decide which loan is right for your financial situation. Some of the factors you may consider include:

• Annual percentage rate (APR) ranges: The APR represents your main cost of borrowing, so the lower the available rates, the better it is for your finances.
• Terms: You may wish to get a longer term to help decrease your monthly payment amount, or opt for a shorter term to save money on interest in the long run.
• Fees: Some lenders may charge origination or late fees, which can increase your cost of borrowing.
• Limitations: While personal loans can be used for many purposes, some lenders may limit how you may use those funds.

Step 4: Use personal loan pre-qualification

Some lenders offer pre-qualification, which can help you understand if you’re likely to qualify for a personal loan. Unlike an official application, pre-qualification doesn’t impact your credit score. In general, you may need to provide basic information, such as how you plan to use the money as well as your name, Social Security number and date of birth. Pre-qualification is not a guarantee of approval, but it can help you narrow down your personal loan options.

Step 5: Gather your documents

Once you’re ready to apply for a personal loan, you typically need to provide documentation to prove your identity, address and income. The requirements may vary by lender. However, most lenders require:

• The application: The lender will usually ask for details like your full legal name, contact information, birth date and Social Security number.
• Housing expenses: Lenders typically ask how much your mortgage or rental payment is.
• Proof of identity: A government-issued ID, like your passport or license, will typically suffice.
• Proof of income: Lenders generally accept pay stubs for the past 30 days, W-2s or tax returns for the previous 2 years. You can also include additional proof of income, such as Social Security or Supplemental Security payments.

Step 6: Submit your personal loan application

Once you’re ready, you can submit the application and find out whether you’re approved. The timeline from application to approval depends on the lender.

If approved, you may get your money the same day. However, it may take longer, depending on the lender and how you’ve opted to receive funds. For example, Citi^® Personal Loan borrowers can get their funds on the same business day when deposited directly to a Citi^® bank account or within 2 business days when deposited directly to a non-Citi bank account¹.

Citi offers unsecured personal loans with zero fees to qualified applicants. If you think you could benefit from a Citi Personal Loan, apply online today.

Frequently asked questions

How can I get a personal loan for the first time?

If you’ve never taken out a personal loan, exploring your options and taking the time to understand the costs and benefits of a personal loan, as well as your credit, may help you find loans that may make sense for you.

What are the requirements for a personal loan?

Personal loan requirements can vary by lender. For example, some lenders may require a higher credit score and income, while others may be more flexible about those factors. Pre-qualification can help you understand if you’re likely to qualify for a given personal loan.

How can I qualify for better personal loan terms?

Focusing on improving your credit may help you access personal loans with better terms, such as a lower interest rate. Some of the steps you may consider include paying down your credit card balances and signing up for autopay on debts to avoid missing payments.

¹Once approved, Citibank can deposit funds directly into an existing Citibank account the same business day, or within 2 business days when deposited to an external bank account, provided the bank account has not been recently opened.  In such instances, Citi reserves the right to reject the bank account as the disbursing account for personal loan funds, and you can select another bank account or select to receive a check by mail, which is delivered generally within 5 business days.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.