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How to get preapproved for a personal loan

Here's what you need to know to get preapproval from a lender.


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Chances are you’ve heard the term preapproval before, but it often only comes up when talking about mortgages. You might not have seen it attached to personal loans, but receiving preapproval for a loan is a vital part of the application process.

Our guide will take you through what preapproval means and how you may be able to get a sneak peak into how much you could be able to borrow – and at what cost.

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  • APR: 10.00%-46.96%
  • Loan amounts: $500-$50,000
  • Loan terms: 6-60 months
  • Fees: No application or origination fees
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What is preapproval?

A preapproved loan is an offer of a loan pending full approval. Preapprovals are available with many types of loans, including personal loans, car loans and mortgages. They usually remain valid for several months, but they won’t guarantee you funding.

When a lender is willing to consider you for a personal loan, they’ll often notify you of your preapproval. Most online applications will end with either a preapproval offer or denial based on your financial situation and credit score. If you’ve been preapproved, your lender will likely contact you to finalize the loan and determine if you’re officially approved.

You may also receive an unsolicited offer from a lender in the mail or through an email. These are to encourage customers who may not have previously considered borrowing, but even though you receive a preapproval notice, you still may not qualify for a loan.

How the preapproval process works

When you’re ready to apply for a loan, follow these steps to see if you can be preapproved by your lender.

  1. Select a lender from the table below.
  2. Fill out a preliminary loan application.
  3. Wait while the lender reviews your application.
  4. Receive your preapproval decision.
  5. Continue to the official application.

Your lender will likely contact you to confirm the information you’ve submitted if you’re preapproved for a loan. Be sure everything is accurate. At this point, your lender may take a day or two to fully underwrite your loan application. If you do receive an official approval, review your contract carefully and decide if you still want to move forward with the loan.

It’s worth noting that in many cases, preapproval takes place online within just a few minutes. This is because the lender and its underwriting team haven’t evaluated your application yet and are using software to analyze the information you supply. On-the-spot preapprovals are often just indications that you may qualify for a loan, but they do not guarantee approval.

If you’ve received a letter from a lender that says you’re preapproved, then this process doesn’t apply to you. The lender has used information available to them to determine that you may be eligible for one of their products. If you want to apply, you’ll need to follow the steps listed in your letter.

Compare top personal loan lenders

Name Product Interest Rate Max. Loan Amount Loan Term Fees Min. Credit Score Link
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
6 months - 5 years
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More Info
Fairstone offers unsecured personal loans up to $20,000
Cash Money Installment Loan
6 months - 5 years
Vary across provinces/territories
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More Info
Cash Money offers installment loans up to $10,000 for AB, MB and NB residents.
LendDirect Personal Loan
19.99% - 46.93%
No end dates
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More Info
Borrow up to $15,000, based on your income and credit history, with a personal line of credit from LendDirect.
LendingMate Personal Loan
43% (British Columbia and Ontario) and 34.90% (Quebec)
1-5 years
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More Info
LendingMate offers loans to Canadians with poor credit with no credit checks. Guarantor required for application.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
3-10 years
Varies by province
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More Info
Fairstone offers secured personal loans up to $35,000.
Alpine Credits Home Equity Loan
10.00% - 22.99%
Up to 60 months
Between 5% - 8% of your APR will cover closing and admin fees.
Check eligibility
More Info
Alpine Credits offer home equity loans in amounts from $10,000 to $500,000. Must be a homeowner to qualify. Check eligibility for this loan through LoanConnect.

Compare up to 4 providers

How might a personal loan preapproval benefit me?

You can benefit in the following ways:

  • If you seek out preapproval, it can help you feel more confident when making a decision between different loans.
  • You’ll know that a lender is likely to lend you the funds you need, and you’ll have an estimate of how much the loan will cost.
  • Choosing the right loan can be difficult, but knowing your potential interest rate and the fees attached to the loan can help you make the right choice for your financial situation.

Is there a difference between conditional approval and preapproval?

Both terms are used often and may be confusing for people unfamiliar with the industry jargon.

Preapproval is a quick scan of your application to confirm your credit score, income and personal details align with the lender’s qualification criteria.

Conditional approval is given to applicants who may have to supply extra information to the lender. Paycheques, bills and employment records may be required. It means that the lender is likely going to approve your loan, but still needs to gather specific information for its underwriting team.

Some personal loan lenders will use the terms interchangeably. If you’re still confused after receiving preapproval or conditional approval, don’t hesitate to contact your lender and ask questions.

How do lenders identify customers to offer preapproved loans to?

Banks and lenders possess quite a bit of information about their customers and will use this knowledge to promote various products. They make this decision based off your credit score and the personal information you’ve supplied to other lenders.

When you complete an online application, most lenders will perform a soft pull on your credit and run your application through an automated underwriting program. This allows them to quickly gauge your ability to afford a loan, which they then use to offer loan preapproval or deny your application.

Find out if that preapproved loan offer you received is legit

What do I need to submit for a preapproval application?

If you’re ready to submit an application, be prepared to share some personal information with the lender.

  • Your name, date of birth and Social Insurance Number (SIN)
  • Your contact details, including your address, phone number and email
  • Your employment details, including your current employer and income
  • Your financial details, including your expenses and debts

Lenders provide preapprovals based on your application. If it’s inaccurate or missing details, a lender won’t be able to offer you preapproval. Be sure to take the time to gather the necessary documents so that your application is as accurate as possible before you begin.

How can I avoid being denied for a loan?

Lenders may decline preapproval applications for any reason. Some common reasons include:

  • You haven’t supplied the proper documents for validating your income
  • You have a low credit score or don’t meet other eligibility criteria
  • You have too many inquiries on your credit report

Unfortunately, there’s no way to avoid loan rejection aside from making sure your application is accurate and reflects your ability to repay the loan. You can work on building your credit score if it’s low or pay down some other debts if your debt-to-income ratio is too high to meet a lender’s qualifications.

What to watch out for

Some common things to watch out for when looking for preapproval include:

  • Always be wary of a lender’s reputation. Check customer reviews and the lender’s website, and never agree to a loan from a lender that you don’t trust. There are many scams out there that look legitimate, especially in the online world.
  • Some disreputable lenders will send postcards in the mail or forward an email that mimics a real lender. Confirm that these preapproval offers are real before proceeding with a loan application.

Bottom line

Being preapproved for a personal loan can help you make a more informed decision about your finances in the near future, but it can be a confusing process if you don’t know what to look out for. Remember that a preapproval offer doesn’t guarantee you a loan and that lenders will likely consider both your credit score and your income before extending preapproval.

You can compare your personal loan options to find the right lender before you submit an application. Make sure you meet the eligibility requirements and have the necessary documents on hand in order to speed up the application process.

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Frequently asked questions

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