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How to get a personal loan


What’s involved in getting approved for a loan? It’s smart to compare options from several lenders before choosing the loan that’s right for you. Then make sure your credit is in good shape before you apply. In this guide, we’ll outline the approval process for personal loans.

Here’s what we’re going to cover:

  • How do personal loans work?
  • What do I need to consider when choosing a personal loan?
  • Applying for a personal loan
  • Tips for getting loan approval
  • Oportun: Affordable lending options designed with you in mind 

Key takeaways:

  • Personal loans vary in length, amount, APR, and requirements for credit score and collateral. To find a loan that fits your needs, you’ll want to look at several lenders and explore all your options.
  • When applying for a personal loan, you’ll need to supply proof of your identity, address, and income.
  • To get approved for a loan, it can help to raise your credit score, apply with a cosigner, supplement your income, or ask for a smaller loan amount.

How do personal loans work?

A personal loan is a sum of money you borrow from a bank, a credit union, or a state-licensed lender. These loans can be used to cover personal expenses such as home repairs, medical bills, and large purchases. Like any loan, personal loans require you to pay back the money you borrow in addition to the interest your lender charges.

What is interest?Interest is the amount of money you pay your lender to borrow their money. This is in addition to paying back the original loan amount.

There are many different personal loans available, and many lenders to choose from. Here’s some help with exploring your options.

What do I need to consider when choosing a loan?

Here are some factors to consider and compare when you look at personal loans.

Loan term

The loan term is the amount of time you have to pay back the money you borrow. Some loans have terms of one year or less. Other loans can be repaid over a period of years.

Annual percentage rate (APR)

The annual percentage rate includes both the interest on your loan and the fees your lender charges. This is the most accurate measure of what a loan will cost you.

The APR on a personal loan can vary greatly from one lender to another. Some large banks will offer APRs of less than 10 percent to favored customers. Payday loans, which are often the most expensive choice, may charge APRs of over 400 percent.

Loan amount

The amount of your loan depends on the expense you want to cover and the total your lender approves.

Credit score requirements

Your credit score is a major factor in determining what loans you qualify for, and what the APR on them will be. The higher your credit score, the better.

What is a credit score?Your credit score is a number between 300 and 850 that gives businesses an idea of how likely you are to make payments on time.


Personal loans come in two types: secured and unsecured. A secured personal loan requires you to put up collateral. If you do not pay back the loan, the lender can sell your collateral to make up for what you owe them.

What is collateral?Collateral is something of value that you agree to give your lender if you fail to make your payments on time.

An unsecured personal loan does not require collateral. However, its interest rate may be higher because the lender is taking more risk.

Applying for a personal loan

Now that you know what to look for in a loan, how do you apply for one? You might start the process by talking to a lender you trust. They can ask you questions about your finances and help guide you to loans that fit your needs.

Talking to several lenders can give you an idea of the options available. Don’t be afraid to ask any questions you may have. A good lender will be happy to explain what to expect if you borrow money from them.

Requesting prequalification on a loan is a good way to tell if you’re likely to get approved. Many lenders allow you to request prequalification online. This will not affect your credit score.

Once you’ve decided on the loan you want, it’s time to submit a formal loan application to the lender of your choice. Lenders usually want you to provide the following with your application:

  • Your Social Security number or government-issued ID
  • Proof of address, such as a utility bill (light, gas, etc.)
  • Proof of income, such as your paystubs or W-2
  • Your employer’s contact information
  • A list of your monthly debt payments

Tips for getting loan approval

If your first loan application wasn’t successful, don’t give up. You can work on improving your chances before you try again. Here are some strategies that may help you get approved for a personal loan.

Raise your credit score

Many lenders require a minimum credit score of 610 to 640 for personal loans. If your credit score is lower than this, you can start bringing it up by making sure you pay all your bills on time every month.

It’s also a good idea to check your credit report for free at AnnualCreditReport.com. If you find any errors that could be affecting your credit score, be sure to report them so they can be corrected.

Apply with a cosigner

If you have a friend or family member with excellent credit, consider asking that person to be a cosigner on your loan. By cosigning your application, they are agreeing to pay back your loan if you do not make the payments. A lender may be more likely to approve your application if someone with a high credit score cosigns for you.

Supplement your income

When deciding whether to approve your loan application, lenders will want to know your annual income. You may be able to earn more money by taking a part-time job in addition to your regular work, or by starting a side hustle. Be sure to include your income from all sources on your personal loan application.

Ask for a smaller loan

When applying for a loan, be realistic about how much money you need. You may be able to qualify for a smaller loan even if you’ve been turned down for a large one.

Oportun: Affordable lending options designed with you in mind

Now that you understand how to get approved for a personal loan, you can learn about how Oportun may be able to help you if you’re looking for affordable credit options. Visit our homepage to learn about:

  • Personal loans
  • Credit cards
  • Secured personal loans
  • And more!


WalletHub. Types of loans

Investopedia. Personal loan: Definition, types, and how to get one

The Balance. The basics of personal loans

Experian. What’s a good interest rate on a personal loan?


The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied upon as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.

Personal loans through Oportun subject to credit approval. Terms may vary by applicant and state and are subject to change. If you refinance, you may pay interest over a longer period of time or at a higher rate and the overall cost of your loan may be higher. Loans in CA, ID, MO, NM and WI are originated by Oportun, Inc. California loans made pursuant to a California Financing Law license. NV loans originated by Oportun, LLC. In AL, AK, AR, AZ, DE, FL, GA, HI, IL, IN, KS, KY, LA, MI, MN, MS, MT, NC, ND, NE, NH, NJ, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA and WY loans are originated by Pathward®, N.A.. Terms, conditions, and state restrictions apply.

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