Loan Timeline: How Long Does It Take To Get A Loan

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Whether you’re in the market for a new home, looking to finance a vehicle, or seeking some extra cash flow for a new startup business enterprise, taking out a loan is a must for most people. Loans make it possible for people to make major purchases without having to have huge sums of cash on hand. Plus, while acquiring debt may seem like something you’d to avoid, paying off your loan responsibility can actually build your credit, which will grant you access to more loans with lower interest rates. Oftentimes people seek out loans when they are in need of money fast. So, at the end of the day, how long does it take to get a loan? The answer to this question will change due to many variables depending on the nature of the loan. However, we are going to cover the basics of the loan timeline to help you clarify how long getting a loan is likely to take. There are many loan options out there, each with different terms and conditions, so don’t rush into signing the dotted line. Instead, it’s important to make an informed decision and choose a loan that works for you.

What Is A Loan?

Before we dive into the logistics of the application process, let’s start with the basics. If you’ve clicked on this article, you most likely have a general idea of what a loan is: an amount of money that one borrows from a lender and pays back over time. However, there are several more pieces to the puzzle. When an individual takes out a loan , the amount of money that they’ve borrowed is referred to as the principal. However, you will not only be required to pay back principal, but something called interest as well. Interest is essentially a fee for borrowing money and is often a rate that is set as a percentage of your principal. So for instance, if you borrow $10,000 with an interest rate of 3.5%, you’ll actually end up paying the lender back $10,350. Furthermore, sometimes borrowers are required to pledge collateral when taking out a loan. Collateral is any asset with a worth that is equal to or greater than the money owed. This way, if you default on your payment, the lender can seize this asset and sell it in order to receive your promised money. Loans with collateral are called secured loans and include things like mortgages and car loans, where the collateral is the house or car itself.

How to Apply For A Loan

The loan process starts by filling out an application. Before even this step, there are some basic requirements that you should make sure you fulfill. For example, you must be at least 18 years old, a US citizen, and you’ll be required to make a minimum household income for many loans. Next, you’ll need to provide some basic information about yourself so that the lender can verify your eligibility for the loan. This includes your bank identification information, which consists of your social security number, name, and address. Additionally, you’ll also need to provide proof of employment, which can be either paystubs or your employer’s contact information. Applications can be made either online, over the phone, or in-person at the lender’s establishment. While meeting with a lender in person requires a little extra time and effort on your end, it has its benefits. According to Mike Schenk , deputy chief advocacy officer and chief economist for the Credit Union National Association, “A lot of people don't like to read the details on forms (themselves). To have someone help you understand that process and what the forms mean can be helpful in some cases." The most important factor in determining whether or not you qualify for a loan will be your credit history and credit score. Credit scores are determined by the three major credit bureaus, Equifax, Experian, and Transunion. Ideal credit scores sit somewhere around 670 ; however, you may be able to qualify with a credit score of 600 or above, depending on the loan. Furthermore, bankruptcies in your credit score can also be challenging roadblocks on your path to being approved.

How Long Does It Take For A Loan To Go Through?

The loan approval process happens relatively quickly, though it will vary based on the kind of loan you’ve applied for. It’s important to note that once you are approved, the money isn’t instantly handed over. While approval in certain situations can happen in just a few hours, it typically takes the bank several business days to transfer the money. Let’s go over a few of the different kinds of lenders that you are likely to borrow from and what their approval process is like.


To start off, banks are private financial institutions, so their eligibility requirements are a bit stricter than some other kinds of lenders. Furthermore, interest rates will typically be higher as well. Once you get approval through a bank, you can expect to receive your funds in one to five business days. For instance, Wells Fargo disburses loans the following business day, while Citibank sends out mail checks within one to five business days after approval.

Credit Unions

Credit Unions , on the other hand, are non-profit organizations. Because of this, the criteria to qualify for a loan at a credit union is a little broader than that of a bank, and interest rates are likely to be lower as well. Credit unions are member-owned and exist to promote the well-being of their members. The timeline for credit union loans is similar to that of private banks, although some offer same-day funding.

Online Lenders

The application for loans through online lenders is often both a fast and easy process. Online lenders also make it easy to compare various loans and rates so that you can easily pick the best option for your specific needs. Online lenders also cater to all sorts of borrowers, so even those with lower credit are still eligible to qualify. However, interest rates vary greatly based on your credit score, so those with lower scores should expect to pay larger amounts of interest. The speed at which borrowers are approved and receive their money is typically much faster than brick and mortar banks. For instance, Seek Capital offers pre-approval in just 2 hours. Plus, many online lenders offer disbursement within just one business day of approval. For those who are facing a time crunch and need money fast, online lenders are a great, convenient solution.

Tips To Speed Up The Process

Be Thorough With Your Application

In any situation, it’s ideal to receive your loan disbursement sooner than later. Luckily, there are several things that you can do to speed up the process. For instance, while filling out the application, there may be certain seemingly irrelevant questions that you are tempted to ignore to expedite the completion of your application. However, this may come around to bite you if it turns out that these pieces of information are necessary for you to be approved. It’s best to fill out your application thoroughly.

Gather Your Information Ahead of Time

Certain information and documents will be required for any loan you apply for in order to confirm your identity and check your credit. Knowing what information is needed and having it ready on hand will save you from searching through your filing cabinet mid-application to search for the required paperwork. Some of this information includes:

  • Government-issued I.D.
  • Record of total household income
  • Details about your monthly expenses
  • Proof of income

The sooner you make all this information available to lenders; the quicker lenders can approve you for a loan and disburse the money to you.

Check Your Credit

One way to speed up the loan shopping process is by checking your credit score before applying. Certain loans require you to have a certain credit score to qualify. Knowing your credit score will help direct you towards loans that will offer the best interest rates based on your credit score and prevent you from wasting time on applications that you would be outright disqualified from. Knowing your credit score can also help you make choices that will allow you to build it, which will approve you for lower interest rates in the future.

Final Thoughts

As stated above, loans are a great way to fund large purchases and an opportunity to get money fast. While online lenders in particular offer speedy approval and disbursement, you may still be tempted for what is advertised as payday loans. These, however, often come along with crippling rates and fees and can end up costing you big time in the long run. Other alternatives to taking out a personal loan include borrowing from friends and family or taking out a 0% APR credit card. Whichever route you take, it’s important to have a plan to make sure that your debt gets paid in full. With a little bit of planning, you’ll be on your way to securing the financing you need to fulfill your business or financial dreams. Sources: How Long Does It Take To Get A Loan | USN How Long Does It Take To Get A Personal Loan | Experian How Is A Credit Union Different Than A Bank | My Credit Union

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