How to Get a Personal Loan: Everything You Need to Know

A personal loan is a sum of money borrowed from a lender to cover a large expense or consolidate debt. While you must meet certain requirements to get a personal loan, you can use the money for almost anything if approved, such as paying off high-interest credit card debt or funding major expenses. Once approved, the lender will send you money in a lump sum, and you'll repay the amount you've borrowed, plus interest, in manageable monthly installments. If the loan is for debt consolidation, some lenders pay directly to creditors. Rates on personal loans tend to be lower than those attached to credit cards.

Most personal loans are unsecured, meaning they aren't backed by collateral, such as your home or car. Lenders will look at factors like your credit score and overall finances to determine if you qualify and at what rate.

When you apply for a loan, lenders will first verify that you meet personal loan eligibility requirements. During the application process, you'll be asked to verify your identity, income, and employment status.

After satisfying the initial qualifications, lenders will look at your finances to determine your creditworthiness—that is, your ability to repay debts. A lower credit score suggests to lenders that you may be a higher-risk borrower, and lenders may increase interest rates or shorten repayment terms as a protective measure. Borrowers with excellent credit usually receive more competitive offers. 

A solid track record of making on-time payments and several years of credit history will ultimately increase your chances of approval.

FYI: A BHG personal loan does not require collateral as part of its eligibility check. Learn more about our easy application process here.

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.

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.

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.

TIP: Choosing a longer repayment term can make your monthly payments smaller. BHG Financial offers large personal loans up to $200,000,¹ with no collateral required and fixed, affordable payments with terms up to 10 years.^1,3

Can you get a personal loan with bad credit?

Yes, it’s possible to get a personal loan with bad credit, but you may face less-than-ideal terms like higher rates, lower loan amounts, and origination fees. Offering collateral or adding a cosigner can help improve your approval odds if you have fair or poor credit. Not all lenders are willing to work with borrowers with lower credit scores. Specialty lenders may take on higher-risk borrowers.

How long does it take to get a personal loan?

Most personal loans are processed within a few days, but some lenders may take several weeks to approve your loan and distribute funds. You can help speed up the process by working with a lender that uses a simple online prequalification form, prioritizes fast responses, and has dedicated loan specialists to guide you. Having all your required documentation ready will also help streamline approval. With BHG, you can receive funds in as few as five days if approved.²

What is the average interest rate for personal loans?

The average personal loan interest rate hovers around 12%, according to the Federal Reserve. The lowest rates are given to those with excellent credit, and those with poor credit may see rates over 30%.

Will applying for a personal loan hurt my credit score?

Applying for a personal loan will trigger a hard credit inquiry, which usually causes a small, temporary dip in your credit score. Some lenders will do a soft credit inquiry during the preapproval process to see what you may qualify for.

What’s the difference between secured and unsecured personal loans?

Unsecured personal loans don’t require collateral, while secured loans do. Any collateral asset put down for the loan—such as your home or vehicle—can be seized by the lender if you default on your secured loans. Unsecured loans have higher interest rates, while secured loans are usually easier to qualify for.

At BHG Financial, we believe financing should fit seamlessly into your life and goals. That’s why we offer personal loans tailored to your needs, with amounts up to $200,000¹ and flexible terms of up to 10 years^1,3.

Plus, you’ll enjoy dedicated, U.S.-based concierge service that works around your schedule—because your time is valuable. Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.