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Getting a personal loan can be a lifesaver when you need to cover unexpected expenses, consolidate debt, or finance a major purchase. But the time it takes to get approved and receive the funds can sometimes be a source of anxiety, especially if you’re in a pinch. Don’t worry, though! This comprehensive guide will break down the personal loan approval process and answer the burning question: how long does it take for a bank loan to be approved?
Understanding the Process: From Application to Approval
The personal loan approval process typically involves three main stages:
1. Application: This is where you provide the lender with your personal and financial information including your income, employment history, and credit score. Most applications can be completed online in just a few minutes.
2. Approval: Once you submit your application, the lender will review your information and determine whether you meet their eligibility criteria. This stage can take anywhere from a few minutes to a few days, depending on the lender’s underwriting process.
3. Funding: If you’re approved, the lender will deposit the loan funds into your bank account. This usually takes between one and five business days
Factors Affecting Approval Time:
Several factors can influence how long it takes to get a bank loan approved, These include:
- Your credit score: A higher credit score indicates a lower risk for the lender, which can lead to faster approval times.
- The lender’s underwriting process: Some lenders use automated underwriting, which can provide an instant decision. Others rely on manual underwriting, which can take longer.
- The complexity of your application: If your application requires additional documentation or verification, it may take longer to process.
- The time of year: Loan demand tends to be higher during certain times of the year, which can lead to longer processing times.
Personal Loan Funding Time by Lender:
The following table provides an overview of the typical approval and funding times for different types of lenders:
| Lender Type | Approval and Funding Time |
|---|---|
| Online lenders | 1-3 days |
| Banks | Within a week |
| Credit unions | Within a week |
How to Get Approved Faster:
There are a few things you can do to speed up the personal loan approval process:
- Check your credit score and address any errors.
- Gather all the necessary documentation before applying.
- Pre-qualify with multiple lenders to compare rates and terms.
- Apply online for a faster and more convenient experience.
Additional Resources:
- Bankrate: How Long Does It Take to Get a Personal Loan?
- CU SoCal: How Long Does It Take To Get A Personal Loan?
- NerdWallet: How Long Does It Take to Get a Personal Loan?
Frequently Asked Questions:
- Q: How long does it take to get a personal loan with bad credit?
- A: It may take longer to get approved for a personal loan with bad credit, but there are still lenders who are willing to work with borrowers with lower credit scores.
- Q: Can I get a personal loan the same day I apply?
- A: Yes, some online lenders offer same-day funding, but this is typically only available for borrowers with excellent credit.
- Q: What happens if my personal loan application is denied?
- A: If your application is denied, you can try to improve your credit score or apply with a different lender. You can also request a copy of your credit report to see if there are any errors that need to be corrected.
Getting a personal loan can be a quick and easy way to access the funds you need. By understanding the approval process and taking steps to speed things up, you can get the money you need in no time. Just remember to shop around and compare rates and terms from multiple lenders before making a decision.
How long it takes to get a personal loan by lender type
The majority of loan applications can be finished in a matter of minutes, and within one to three business days, funds can be electronically transferred to your bank account. But the exact timeline depends on the type of lender you work with and its underwriting process.
- 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. That being said, if there are any errors or omissions from your application, the process might take longer.
Advertisements frequently promise same- or next-day funding, but these times depend on when you apply and how your bank handles deposits. You might not see the money in your account for two or three more business days even if you are approved and the funds are sent that same day.
- Approval time: One to three business days.
- Funding time: Three or more business days.
Some banks offer personal loans with quick prequalification and funding. Furthermore, if you currently have a checking or savings account with the same institution, you might be eligible for better interest rates. Nevertheless, based on your loan agreement, the bank may automatically deduct money from your checking account if you fall behind on payments.
Many banks take longer to process applications and fund loans than online lenders. Additionally, their credit requirements are stricter, which may make it more difficult for you to qualify if your credit isn’t perfect.
- Approval time: One to three business days.
- Funding time: Three or more business days.
Although personal loans are primarily provided by federal credit unions, smaller local and regional credit unions also provide them. Like with banks, funding is not as quick as online lenders. In spite of this, if you already have an account and are able to receive direct deposits, a credit union can still process your request rather quickly. Otherwise, the process may take a few extra days if you pick up a check and sign loan documents in person.
Having said that, credit unions still provide extremely low interest rates and are typically more accommodating when it comes to credit requirements than most banks. Unlike banks, which are owned by shareholders, credit unions are member owned. Compared to banks, credit unions may provide superior customer service because they are more concerned with the financial well-being of their members than with maximizing profits.
How long each step takes
Getting a personal loan involves three main steps: applying, being approved, and receiving funding. Each of these steps takes a different amount of time depending on the lender you’re working with.
Although each lender has different standards for approval, almost all applications will ask for the same kinds of data. Because of this, you should be able to apply for a personal loan within just a few minutes. When you apply, have your most recent federal tax return, identification, bank statements, and W-2s on hand to expedite the process.
If a lender offers prequalification, it’s likely that you’ll know the status of your application within minutes. This is due to the fact that lenders who provide this feature usually use automated underwriting for approvals rather than depending exclusively on loan officers to render a judgment.
When a company uses automated underwriting, its software, or technology that it pays for, assesses the data from your credit report and application. If its analysis determines you match the lender’s requirements you’ll usually get a conditional decision almost instantly. However, the approval of the offer is still contingent upon the application information being verified, which may require a day or two.
If a lender only uses manual underwriting the process can take a few extra days. This is due to the fact that all of your data will be examined and compared to the underwriting requirements by someone.
If you are approved, funding generally takes between two to five business days. If you choose direct deposit into a bank account, most banks and credit unions should be able to fund your loan within a week of your application; smaller banks and credit unions may take longer.