How long does it take to get a personal loan in 2024?

No one wakes up in the morning and decides they want to take out a personal loan. People take out loans because of circumstances that are almost always out of their control.

Which doesn’t make the process of getting a personal loan any less frustrating, especially when you need the money quickly.

So, how long does it take to get a personal loan?

While the general turnaround time varies between 7 to 30 days, there are a lot of other factors that come into play. Some lenders can get funds in your account in as little as 24 [business] hours.

In this article, we’ll cover everything you need to know about getting a personal loan.

Here’s what this article covers:

(click on the links below to jump to a specific section)

Let’s get started.

Different Types Of Lenders

A key factor determining how much you can borrow and how long it’ll take to get approval is the type of lender you choose. There are three key personal loan lenders -

Banks and Credit Unions
Online Direct Lenders
Peer-to-Peer Lenders

Let’s discuss each one.

How long does it take to get a personal loan through a bank or credit union?

Banks and credit unions are an excellent option for borrowers with high credit scores and airtight credit history. They have physical locations where you can discuss your personal loan requirements with a customer service person and check with them whether you have all the necessary documents. You can also submit your application in person. If you have bad credit and need immediate access to funds, an online payday loan might work for you.

For these reasons, they are usually the first option that people consider when they want a loan.

Loan application approval time: Few days to a few weeks

Getting approved for a loan by a bank/credit union can take time. This comes down to two reasons:

They generally need borrowers to have high minimum credit scores and also take time to review your application to ensure you meet their strict screening process.
They mostly rely on staff to underwrite loans, which is a time-consuming process.

Time taken by the lender to pay funds: Next day or a few weeks

Getting your loan money from a bank or credit union depends on whether or not you already have an account with them.

If you do, it shouldn’t take too long and you could be looking at a turnaround time of just a day after your loan is approved. However, if you don’t, this could take a while as it would involve a balance transfer between different banks.

A balance transfer is a transfer of money from one account to another - in this case, it would be a transfer between the lender’s account and your bank account.

How long do online direct lenders take to provide a loan?

Online direct lenders are an excellent option for people looking for quick turnaround times and a lighter screening process. As they’re completely web-based, they’re also viewed as more convenient than banks/credit unions.

Loan application approval time: Few minutes to a few days

Filling out an online loan application won’t take you more than 20 minutes if you have all your documents ready. As your application is automatically logged into their server, it could get approved within a few minutes. This method is far more time-efficient than the manual approach adopted by banks.

Time taken by the lender to pay funds: One to two business days

As online direct lenders rely on algorithms and technology to process your application, getting your loan approved doesn’t take long. Once approved, they’ll deposit the funds in your account which can take up to a day to reflect.

How long do peer-to-peer lenders (P2P lenders) take?

P2P Lending involves loanees directly borrowing money from investors instead of a bank or agency. They’re viewed as an attractive option for loanees who need quick cash loan and haven’t been successful with banks and credit unions.

Loan application approval time: Few business days

P2P lenders take longer than online direct lenders to approve your application. However, with an approval time of a few days, they’re a more time-friendly option than banks and credit unions.

Time taken by the lender to pay funds: Few days to a week

As P2P lenders rely on investors for their funds, getting your loan amount in hand can take some time. While it generally takes a few days, it’s not uncommon to wait over a week for your P2P loan.

Comparing the fastest options for getting a personal loan

Here’s a comparison table that shows all you need to know about the fastest loan providers. You can use this table as a handy guide to see which quick turnaround lender suits your personal needs best.

Factors that affect your turnaround time for a loan

There are a few key factors that affect the time it takes to complete your personal loan process. Here’s a closer look at them:

1. Your creditworthiness

Your credit score plays a crucial role in determining how smooth your loan approval process will be. People with higher credit scores are generally subject to:

Fewer screening processes
Quicker approval times
Greater loan amounts
Unsecured loans
Lower personal loan EMI

If your credit score is poor, you may have a tough time trying to borrow money as providers will:

Set up stricter screening procedures
Charge you with a higher interest rate loan and a higher origination fee
May charge you with variable interest rate loans
Offer you lower loan amounts
Specify a heavier collateral
Mandate stricter loan repayment terms
Establish mandatory prepayment terms

2. Your income level

Just like your credit score, the higher your income level, the easier your loan process will be. While it is possible to get a loan without any proof of income, you’ll be charged more collateral and higher annual percentage rate of interest

3. Accuracy of the financial information you submit

Ensure that the financial information and documentation you offer a lender is accurate and up-to-date. Any discrepancies in your credit score and social security number will complicate the process.

4. Where you apply

Another factor that plays a role in your turnaround time is the type of personal loans provider you choose. Banks, online loan providers and peer-to-peer lenders offer different credit limit and turnaround time. For example, regardless of how prepared you are, loaning from a bank generally takes longer than an online direct loan.

5 tips to speed up your loan approval process

Use these 5 tips to ensure that your loan approval process remains as streamlined as possible:

1. Assess your personal needs

Before applying for a loan, use a personal loan calculator to find out how much money you need to borrow. This will help you decide on the right loan provider for your needs.

For example, say you have unexpected expenses that are likely to pop up in the next few months. A payday loan from your local bank can be one option to tide over such an event. Keep in mind that payday loan amounts are usually under $500, but they charge a high interest rate. Also, for payday loans, try to ensure you repay the loan as soon as you get your next paycheck to avoid penalties associated with late payments.

2. Check the lender’s eligibility criteria

Do your research to determine if you qualify for a lender’s eligibility criteria or not. There’s no point applying to a lender if you don’t meet their minimum credit score. This has two adverse effects:

You’ll be wasting time waiting for an approval that won’t come.
In case they conduct a hard credit check, your credit score could temporarily dip - making it harder to build your credit and get loans from other places.

3. Evaluate your financial situation

Use credit reporting tools to check your latest credit score and credit utilization ratio before applying for a loan. This gives you an accurate idea of where you stand and whether you’ll easily meet the personal loan eligibility criteria.

4. Apply online for faster processing

Tons of lenders offer you easy online applications that plug your information into an automated review system. As technology controls the loan approval process here, you could get an approval within minutes!

5. Check for pre-qualified loans

Always check if you’re eligible for loan pre-qualification at your bank. While this doesn’t ensure approval, it greatly increases your odds of success. It’s a great way to sidestep the typical lengthy approval process and get your loans processed faster.

Getting a personal loan doesn’t have to be time-consuming

The process is simple: All you have to do is evaluate your needs, research some personal loan providers and find the best fit based on their requirements and your needs. Once you master that, you should expect to have a seamless borrowing experience.