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If I apply for a personal loan, do I have to accept it?

No legitimate lender will make you an offer you can't refuse.

Unlike with credit cards, applying for a personal loan doesn’t mean you’re automatically signed up. You still have to review and sign the contract before you get your funds. And while there are a few potential negatives to rejecting a loan, it can be a good move if the offer just isn’t right for you.

Do I have to accept a loan offer?

No, you don’t have to accept a loan offer just because you applied. After you’re approved for a loan, you have a chance to review the rates, terms and other conditions first. You won’t be on the hook for a loan until after you’ve signed your promissory note — otherwise known as your loan contract.

What happens if I don’t accept an offer?

You won’t receive the funds and won’t be responsible for repaying the loan. However, there can be a few negative consequences:

  • Lose your application fee. While most lenders don’t charge an upfront application fee, some do. You have to pay this before you apply, meaning if you get rejected or decide not to take out the loan, you’re out that amount.
  • Credit score takes a hit. In most cases, lenders run a hard credit check when you apply for a loan, which can lower your credit score. This can hurt your chances of getting a competitive rate if you decide to apply for a loan elsewhere.

Prequalify first to avoid hurting your credit

Most lenders offer the option to prequalify before completing the full application. This lets you check your eligibility and get an estimate of the loan amount, rates and terms you might receive. And it’s typically based on a soft credit pull, meaning your score won’t take a hit.

You aren’t guaranteed to get the rates you prequalify for, but it can give you a risk-free idea of what your offer might be.

How long do I have to decide?

That depends on the lender. Some might expect an answer right away. Others might give you a window as long as a week, two weeks or even 30 days to decide if you want to take out the loan. After you receive an offer, the lender should let you know how long you have to accept it before it expires. If it doesn’t, reach out to customer service.

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Can I return a loan after I’ve received the funds?

That also depends on the lender. Some personal loan providers give you a day or two after accepting a loan to cancel it. Others like Discover might give you as long as a month. But return periods are more common with student loans than personal loans.

If you no longer need the loan, pay it back as soon as possible — even if there is no return period. The longer you wait, the more you’ll have to pay in interest.

6 reasons to reject a loan offer

There might be potential negatives to rejecting a loan offer. But taking out a loan that’s not right for you can be expensive and ruin your credit. Here’s when you should say no:

  • You can’t afford repayments. If your loan amount, rate and term give you a monthly cost that’s way outside your budget, saying “yes” can set you up to default.
  • You’ve qualified for a better deal elsewhere. While some lenders like LightStream might match rates from another provider, most don’t.
  • Your financial circumstances changed. Getting laid off, injured or facing any other unexpected hit to your monthly income might make you want to rethink that loan.
  • You found free funding somewhere else. Loans are meant to cover costs you can’t foot any other way. If you’ve suddenly come into money, it’s usually best to use that instead.
  • You don’t agree with the terms and conditions. You’ve read the contract and you don’t like everything you’re agreeing to — maybe it comes with high late fees or reserves the right to change your rate at any time. Now is the best time to walk away.
  • You think it could be a scam. If anything about a lender sets off your alarm bells — maybe it’s asking for payment in the form of gift cards — don’t sign the offer.

Consider these factors before accepting a loan

Before you sign on to any personal loan, consider the following factors:

  • Monthly cost. Use our monthly payment calculator to find out how much it’ll cost you each month based on the loan amount, APR and terms. If you don’t think you can afford it, don’t sign the contract.
  • Total cost. Some loans with low monthly costs will end up with a total interest cost that’s more than the amount you borrowed. In a pinch, it still might be worth it. But otherwise, it’s not.
  • Fees. Lenders sometimes tack on an origination or processing fee to your loan after you agree to the offer. You’ll either receive less funds than you applied for, or have to repay a higher balance than you receive.
  • Terms and conditions. Actually read your loan contract before you sign it to look out for red flags, like blank spaces where lenders could put in additional terms.

Bottom line

Lenders allow you to reject your personal loan offer if you don’t like the rates and terms you qualify for. If you face any negative consequences, those are often outweighed by the potential fallout of signing on to a loan that’s not the right fit for you. You can read our guide to personal loans to find out more about how they work.

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