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How Soon Do You Receive Money After Applying For A Personal Loan?

Written by Banks Editorial Team

Updated August 10, 2021​

3 min. read​

Most applicants ask this question when considering applying for a personal loan: How soon will you receive money after applying for a personal loan? With the increasing prevalence of online lenders specializing in a quick turnaround of the personal loan application process, prospective borrowers can receive funds in as little as a couple of days.

Even with these claims from online lenders, it would be sensible to allow at least 7 days for the application to be finalized. Applications for personal loans from banks tend to take a week or longer, although the transfer of funds speed up if the borrower already holds an account with the bank.

How Soon Will You Receive Money After Applying for a Personal Loan: The Process

If you’re looking for a personal loan, you might be in need of funding in a hurry. The time frame of each of the various steps in the process of applying for a personal loan varies between lenders, with some online lenders able to approve and disburse loans in a matter of days. On the other hand, banks generally take at least a week to complete the process. When looking for personal loans, aim to apply to lenders within a short time-frame of only a couple of weeks, as too many hard checks of the credit score — an essential step in order to obtain the lender’s final approval — will affect it.

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Online VS Traditional Lenders

The first thing the borrower needs to do when applying for a personal loan is to select the lenders from whom they seek to receive a loan. The borrower then needs to submit their applications to obtain approval along with the loan rate and terms that the lender will offer. With online lenders, this application is done online, whereas banks accept applications online, over the phone or in person. Online applications typically take only a few minutes, allowing for online forms to be completed and the documents to be uploaded electronically. Phone or in-person applications generally take longer but have the added benefit of the opportunity to speak to an employee, which can prove beneficial if you have any questions or issues. So applying through and online or traditional lender will impact on how soon will you receive money after applying for a personal loan.

Once the application has been received, the time frame for the lender to make a decision regarding loan approval will depend on the lender; some will be able to provide instant approval, whereas others will get back to the applicants in days, or sometimes weeks after the application has been submitted. Instant or same-day approval generally only requires conditional approval, also known as pre-approval or pre-qualifying. Pre-approval involves only a “soft check” on the borrower’s credit report and does not affect the credit score. This involves finalizing the lender’s review of any outstanding documents and a credit check. As such, ensuring you have all the information and documents required for the application at hand, such as bank statements or payslips for proof of income, will help to ensure the application process is efficient and quick as possible.

So, how soon will you receive money after applying for a personal loan? This will depend on the process and this may vary from lender to lender.

The Credit Check: Hard Inquiry

The credit check that is conducted by the lender in order to approve the personal loan results in what is known as a “hard inquiry” on the borrower’s credit report. Hard inquiries on your credit report do affect your credit score, as 10% of the score is based on how many applications for credit or loans are made, which are kept on record for two years. Multiple hard inquiries on a borrower’s report can be perceived negatively, giving the impression that the borrower is in need of funds or is unable to manage their finances.

However, most credit score models will group together multiple hard inquiries related to the same type of product if they occur within a short time frame. Accordingly, hard inquiries which are all from personal loan applications will have a more detrimental effect if they occur over a period of a few months, compared to hard inquiries made over a few weeks. To soften the negative effect of personal loan applications on your credit score, you should aim to shop around for loans within a short time frame.

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Full or final approval is issued once all requirements have been fulfilled and the information has been verified. It typically takes a few business days for the loan amount to be transferred to the applicant’s bank account. For example, the process of application, approval and funding normally takes 7 days with the Lending Club. Discover can provide same-day approval, subject to the application being complete, and can send the funds the next business day but if there are any issues with the application it may take up to 7 days.

Other online lenders aim for even shorter fund times. In fact, Best Egg, LightStream, RocketLoans and Upstart are able to provide personal loans within a couple of days. Although banks typically take longer to fund personal loans, Citibank has a proven track record of providing loans within 5 business days. Additionally, Wells Fargo can provide loans the same day if the applicant already holds a Wells Fargo bank account.

To wrap up, is it clear how soon will you receive money after applying for a personal loan? The answer is, it depends. On the lender and how quickly you can provide documentation. But if you are in a rush and in good shape, you can probably get your money in as little as a day.

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