How to Get a Loan in 8 Steps (2026)

Taking out a loan can help you buy a new vehicle, pay for home renovations, get married and consolidate debt, among other uses (you can even cover adoption costs). But what really goes into getting a loan?

Step 1: Decide how much you can borrow

Finding the right loan starts with you knowing how much you need and what your current financial circumstances are. Knowing this information is crucial to staying within your means and ensuring you meet monthly repayments in full and on time.

You also need to think about how long you’ll need to repay it and what kind of payments you can afford. Any additional features you’d like from your loan — such as the ability to pay it off early — also need consideration.

Step 2: Find the right loan type

There are different types of loans available for different financial needs. Applying for a loan that directly matches its purpose will improve your chances of getting approved. The most common loan types are:

• Personal loans. Can be used for almost anything.
• Auto loans. For buying a car.
• Student loans. For paying for school expenses such as tuition, housing and books.
• Business loans. For launching or growing your business.
• Short-term loans. For when you’re in a tight financial spot and need cash quick (these include installment, payday and auto title loans).
• Home loans (mortgages). For buying your next home.

Here are some other factors you should look at when considering different loan types:

• Secured vs. unsecured. Secured loans require you to put up collateral, while unsecured loans don’t. If you take out a secured loan and aren’t able to make repayments, your lender can repossess anything you use as collateral and resell it to cut losses. Assets that can be put up as collateral include vehicles, your home and jewelry.
• Fixed vs. variable rate. Loans that are fixed rate will have the same interest rate throughout its entire term, while variable rate loans can have their interest rate change during its term. The main benefit to getting a fixed rate loan is that you can expect your monthly repayments to never change, while a variable rate loan typically has lower interest at the beginning of repayments.

You may also want to compare the maximum loan amounts lenders offer to be sure you can get all the funding you need.

Step 3: Check your credit score

Checking your credit score is important in figuring out what loan amounts and interest rates you may qualify for. Say you’re looking to purchase a car. If you have a good credit rating, a secured personal loan might give you a lower annual percentage rate (APR). However, if you have bad credit, you may need to consider getting a cosigner in order to qualify. You also may not get as good of an APR.

Check your credit score and history for free through each of the three major credit reporting companies (Experian, TransUnion and Equifax). Look to your credit card company for free access to your credit score.

Step 4: See what lenders are offering

Different lenders have varying loan types on offer. For instance, a bank will offer a range of personal loan and credit card products, but is less likely to have solutions for you if your credit score is low beyond possibly being able to offer you a higher APR. Other lenders may only have products for bad credit borrowers, such as payday and installment loans.

Step 5: Find out about eligibility requirements and APR

This is one of the most important steps to take before applying. Lenders list basic eligibility criteria that needs to be met before you can apply for the loan, make sure you meet those terms before you apply. Lenders may also list an APR range that the personal loan can fall in online.

Bad credit loans such as payday loans come with a standard APR that is offered to all borrowers. Some lenders, such as peer-to-peer lenders, let you get a rate estimate without it affecting your credit score. Know what your credit score is and have a fair idea of what APR you may be eligible for before you apply.

Step 6: Compare your options

The way to find the best loan for you is to decide what you want and then to compare all of your options to make sure you’re getting a competitive loan. How much is the lender charging in fees? How does this compare to other similar loans? It can also help to compare the additional features offered by lenders. Remember to keep in mind the eligibility criteria of loans and the APR you may be offered.

Step 7: Gather what you need to apply

The information you need to apply will depend on the lender, and the type of loan you’re applying for. For most loans you will need documents to confirm your identity, prove your address, verify your income and other financials, and you’ll also need information regarding your employment. If you’re applying for a secured loan, you will need additional documentation regarding the collateral.

Some documentation that you might be required to have on hand when applying for a loan include:

• Driver’s license
• Bank statements
• Recent tax documents

Step 8: Fill out and submit an application

Once you’ve settled on the right loan, it’s time to apply. The majority of lenders offer a convenient online application, but you may also be able to apply in-branch or over the phone.

You usually won’t have to fax over any documents if you apply online, but you should check this before you apply. Turnaround time for approval and receiving your funds differs – timeframes fluctuate from a few hours to a few weeks.

Bottom Line

Personal loans can be an option to consider when you’re in need of funds. Understanding the ins and outs of the process can help you confidently decide on the right loan and apply.

Frequently asked questions

• What are some types of loans that could be available to me?

  There are many types of loans available. Some of the ones you can find include: student, home-improvement, green, adoption, pet, vacation, wedding and car loans.

• How do I get a loan if I don't have credit?

  Yes. There are lenders who work closely with borrowers who are building or rebuilding their credit. Also consider building your credit using a secured credit card.

• What happens if I miss my payments?

  Missing payments can negatively impact your credit score. If you think you won't be able to make a payment, contact your lender immediately as they may be able to help you.

Written by

Aliyyah Camp

Contributor

Aliyyah Camp is a SEO content strategist and former publisher at Finder, specializing in consumer and business lending. Her writing and analysis has been featured in CentSai, the Dough Roller and the Chicago Tribune. She holds a BA in communication from the University of Pennsylvania. See full bio