FYI: A BHG personal loan does not require collateral as part of its eligibility check. Learn more about our easy application process here.
How do you apply for a personal loan?
You can complete a personal loan application in just a few minutes if you apply online; however, each lender will have its own instructions for how to get a personal loan. It may take a few days to a couple weeks to complete the approval process. We recommend taking the following steps.
1. Check your eligibility
To apply for a personal loan, begin by checking your credit score and reviewing your credit history. Then, analyze your finances and gauge how your current debts align with your monthly income. Your debt, as well as your current expenses, will help you determine if the loan payment is within your budget and how likely you are to be approved for a loan. (More on this later.)
2. Determine how much you need to borrow
Understanding how much money you need can ensure you don’t borrow too much or too little. This also enables you to sift out lenders based on the range of loan amounts they offer.
Once you settle on a loan amount, you can begin to estimate your monthly payments. Remember, annual percentage rates (APRs) are partially determined by your credit profile and finances, with the lowest rates reserved for prime borrowers with excellent credit.
3. Prequalify and compare offers
Most personal loan lenders offer prequalification, allowing you to view rate quotes with a soft credit inquiry, which won't impact your credit score like a hard inquiry.4 Prequalification usually takes just a few minutes. You’ll provide a desired loan amount within a range offered by the lender, income and employment details, and contact information, like your social security number.
Compare the loan options and terms—including rates, fees, repayment schedules, and monthly payments—to determine which lender has the best offer.
4. Choose a lender and apply
Next, you’ll choose a lender and apply for the loan. To speed up the process, gather the necessary documentation lenders will need to evaluate your financial health.
Examples of necessary documents include:
- Proof of identity: Driver's license, passport, or state-issued ID card
- Proof of income: Recent pay stubs, W-2 forms, or tax returns
- Proof of address: Utility bills, lease agreements, or bank statements
Some lenders require you to disclose how you’ll use the loan during the application. This helps them assess the risk associated with the loan and understand how you plan to use the funds.
Applying for a personal loan is comprehensive by design. BHG Financial aims to simplify this process using a concierge lending experience. Dedicated loan specialists will help you gather the necessary documentation to process your application and guide you through the process.
5. Sign your agreement
Once you’ve submitted your loan application, the lender will review it. If approved, you’ll sign the final loan documents, which detail your terms. Review the terms of your loan carefully before you sign, paying close attention to your monthly payments, disclosures, and any prepayment penalties.
6. Receive and use the funds
After you sign your documents, the funds will be disbursed to you within a few business days. (If you plan to use the loan for debt consolidation, lenders may pay the creditors directly.) Formulate a plan to use the money responsibly and make timely payments.
What factors affect personal loan approval?
Understanding a lender's personal loan requirements helps you find which lenders are most likely to approve your application. Requirements vary, but most lenders want to see a higher credit score, consistent income, and positive payment history when determining your eligibility, which suggests you’re able (and willing) to repay the loan on time.
Here are a few personal loan approval tips to consider:
- Ideal credit score: People with "good" or "excellent" credit scores (670 or higher, according to FICO) typically receive the best personal loan rates and terms.
- Verifiable credit history: The stronger and longer your history of responsible credit use, the better your chances of getting approved for lower interest rates on loans.
- Consistent and steady income: Minimum income requirements vary significantly between lenders. However, a good rule of thumb is to wait to apply for a personal loan until you can show reliable, healthy income.
- Lower debt-to-income ratio (DTI): Lenders also look at how much of your monthly income is allocated to your current debt and use the ratio to gauge your reliability as a borrower. Typically, the lower your DTI, the higher your chances of loan approval.
How to choose the right personal loan
With offers varying significantly among lenders, it’s important to shop around for a loan that meets your needs without compromising your financial wellbeing. Here are a few ways to identify the best personal loan for you.
- Prequalify with multiple lenders: Review the lending criteria and prequalify with several lenders to understand your approval odds and the terms you may qualify for.
- Compare terms: Longer repayment terms make for more affordable fixed monthly payments, but you’ll pay more over the life of the loan—this could be a strategic decision, if you’d prefer to have lower payments. The image below illustrates how your payments change according to your terms.
- Consider reputation and user experience: Evaluate each lender’s reputation for service. Reputable lenders have streamlined approval processes, clear lending agreements, and specialists who are available to answer your questions.
