How to get a personal loan

Step 1: Check your credit score

Your credit score has a big impact on the rate you receive. Most lenders want a score of at least 650. A score of 720 or higher typically qualifies you for the best rates available.

You can check your score for free through your bank, credit card issuer, or sites like AnnualCreditReport.com.

If your score is lower than you expected, take a month or two to pay balances and correct any errors on your report before applying.

Step 2: Calculate how much you need

Before you apply, decide on an exact loan amount. Borrow only what you need. A larger loan means higher monthly payments and more interest paid overtime.

Use a free online personal loan calculator to estimate your monthly payment based on the loan amount, interest rate, and repayment term.

Make sure the payment fits comfortably within your monthly budget.

Step 3: Prequalify with multiple lenders

Prequalification lets you see estimated rates without affecting your credit score. It uses a soft credit check, which leaves no mark on your report.

Prequalify with at least three to five lenders, including:

• Online lenders for fast, fully digital experiences, like Axos Bank

• Banks for relationship-based benefits if you are an existing customer

• Credit unions for potentially lower rates for members

Comparing multiple offers takes about 15 to 30 minutes and can save you hundreds of dollars in interest.

Step 4: Compare loan offers

After prequalifying with several lenders, compare your offers side by side to determine the best overall value. Focus on these key factors:

• APR (Annual Percentage Rate): This reflects the true cost of borrowing since it includes both the interest rate and fees. Always use APR to compare offers rather than looking at the interest rate alone.

• Loan term: A longer loan term lowers your monthly payment but increases the total interest paid. A shorter term costs less overall but results in higher monthly payments.

• Fees: Review origination fees, which typically range from 1% to 10% of the loan amount. Also check for any prepayment penalties or late payment fees.

Taking time to compare offers can help you choose a loan that fits both your budget and long‑term financial goals.

Step 5: Submit a formal application

Once you pick the best offer, submit a formal application. This triggers a hard credit check, which may temporarily lower your score by a few points. That is normal and expected.

Most lenders let you apply online in minutes. You will need to provide:

• A government-issued photo ID

• Proof of address (such as a utility bill or bank statement)

• Proof of income (pay stubs, tax returns, or bank statements)

Step 6: Review and sign your loan agreement

If approved, review your loan agreement carefully before signing.

Confirm the APR, monthly payment amount, repayment term, and any fee details match what you were quoted.

Once you sign, funds are typically deposited directly into your bank account within one to three business days. Some lenders offer same-day or next-day funding.

Small details can make a big difference in the total cost of a personal loan.

These tips can help you avoid unnecessary expenses, protect your credit, and use your loan in a way that supports your long‑term financial health.

Watch for Hidden Fees

Some lenders advertise low interest rates but offset them with higher fees.

For example, a 5% origination fee on a $10,000 loan means you receive $9,500 but still repay the full $10,000.

Always include fees when comparing loan offers to understand the true cost.

Avoid Borrowing More Than You Need

Borrowing extra may feel like a cushion, but it increases both your monthly payment, and the total interest paid overtime.

Stick to the amount you actually need to keep costs manageable.

Time Your Application Strategically

If you plan to apply for a mortgage or auto loan soon, consider waiting until that process is complete before taking out a personal loan.

Multiple hard credit inquiries in a short period can temporarily lower your credit score.

Use the Loan to Build Better Financial Habits

Personal loans can be an effective tool for consolidating high‑interest debt. If you use one to pay off credit cards, commit to avoiding new balances.

Doing so helps reduce debt instead of adding to it.