Personal loans providers often advertise personal loans that you can get “instantly”. Unfortunately, that’s not always the case. Read on to find out how long it really takes to get a personal loan. Plus, how you could increase the chances of a speedy approval.
Applying for a loan may take just a few minutes, but getting your application approved can take anywhere several weeks, depending on your personal circumstances and the type of lender you choose.
Today, lenders generally approve or disapprove applications using an algorithm, rather than a human being who assesses your situation (known as an underwriter). A common exception to this rule is non-standard (read “payday“) loans, where specialist lenders look at more than just your credit score and may even want to chat over the phone before getting out their “approved” stamp.
How long does a personal loan application take?
Most personal loan applications will take less than 15 minutes, regardless of whether you’re applying for a regular personal loan or a short-term loan. However, the precise time it takes to complete a loan application will vary between different lenders, and will also be affected by the personal details and documents you need to provide as part of the process.
- Borrow from S$500
- Repayment flexibility, subject to lending criteria
- Instant approval
DBS Personal Loan
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- Get an interest rate as low as 3.88% (7.56% EIR)
- Borrow from up to 10x your monthly salary
- Near-instant loan approval for existing DBS customers
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Once your application has been given the green light, the actual funding is simply a question of how quick the lender’s processes are – for example, whether they can transfer funds directly into your account immediately or if the payment needs to be completed on a certain business day.
The activation of your loan varies based on the type of loan you’ve applied for, and the lender itself:
Typically funded in: instant – 2 business days (existing customers); 2-5 business days (new customers).
In Singapore, getting a loan from the same bank that holds your current account may actually be the fastest option available to you.
The bank has already verified your identity, and if you have a good track record with it, you may in fact already be effectively pre-approved for loans up to a certain amount.
If you apply through your online banking or app, then a good bank should auto-complete much of the application form on your behalf, and you could receive the funds in a matter of minutes. If you opt for a big bank that you aren’t an existing customer of, then the process is likely to take a couple of working days or so.
Typically funded in: 1 business day – 2 weeks.
Guarantor loans almost always involve a human underwriter assessing applications, rather than an algorithm alone.
There are a few extra hoops to jump through since there are really two people applying together, but it’s important to understand that how long a guarantor loan takes to turn around largely comes down to how organised the applicant and guarantor are. If you’ve prepped your guarantor beforehand, and both you and your guarantor are available to respond to any communications from the lender, you’ll be in for a much quicker turnaround time.
If a guarantor loan isn’t available to you, another option at your disposal could be to try a secured loan, in which money you borrow that is secured against an asset you own, such as your home or car.
Loans from an online-only direct lender
Typically funded in: 1 hour – 1 business day.
These companies are all about a “friction-free” user journey, and have carved out a space in the market by being faster and cheaper than the big banks. They also know that a significant number of their customers will apply for a loan after work, so many – but not all – can issue loans outside of normal working hours. By choosing a trustworthy lender you may expect a slick application process, an instant decision and fast funding.
Loans from a peer-to-peer (P2P) lender
Typically funded in: 30 minutes – 1 week.
Peer-to-peer lenders involve a platform (read “website”) where lenders and borrowers are brought together to invest or borrow money at bank-beating rates – at least that’s the theory.
Again, you can expect a slick application process and an instant decision, but funding times can vary hugely, depending on the platform’s business model. While some peer-to-peer platforms pool investor funds and then dip into that general pool to issue loans, others match a single investor with a single borrower (anonymously) – in which case the borrower has to wait for a willing investor to come along.
Aside from the type of lender you apply with, how long it takes to complete the personal loan process depends on:
- Preparedness. The more information you have readily available to you, the faster the application process typically takes.
- Source of income. Some lenders might take longer to process your application if you’re self-employed or you’re a commission-based employee since it can be more difficult to verify your income.
- Personal credit. Lenders might ask for more information or documents if your credit score is less-than-perfect or you have a short credit history.
- Check the lender’s eligibility requirements. Start by looking out for any minimum income requirements. Applying for a loan you don’t qualify for means you’ll spend more time trying to find a loan in the long run. Also, if your lender uses a hard credit check, it’ll temporarily lower your credit score.
- Gather your documents. Find out what documents your lender typically asks for and compile them before starting the application. These usually include recent payslips and your ID documents.
- Have your information on hand. Having the exact numbers for your salary and any monthly debt payments on hand can cut down on the time it takes to fill out the application.
- Ask questions. Not sure what details to include where? Asking a customer service rep can ensure you don’t make mistakes that could slow down your application. Many lenders today have a live chat feature on their websites.
It can take anything from a matter of seconds to a few weeks to get a personal loan from start to finish. Online direct lenders are typically the fastest overall, though you can sometimes find quick funding from other providers such as credit unions (but be careful – these types of payday loans are a risky way to borrow money).
The speed at which you can access funds is just one factor to consider when you weigh up the pros and cons of a personal loan, however. To learn more about how they work and compare lenders, check out our comprehensive guide to personal loans.
What credit score do I need for a personal loan?
Most lenders require good or excellent credit to get a personal loan. However, it’s possible to find personal loan providers willing to work with borrowers with a higher risk grade. Whether or not you’re accepted for a loan depends on several factors, including how responsible you’ve been when it comes to managing credit in the past.
How long do personal loans last?
It depends on your lender, but most offer personal loans with terms anywhere from one to seven years. The longer you take to pay off your loan, the less you pay each month but the more you pay in interest in the long run.
What’s the maximum you can borrow with a personal loan?
Personal loans typically don’t go much higher than S$250,000. Banks will often set their own limits. For example, with a Standard Chartered CashOne Personal Loan you can typically only borrow up to four times your monthly salary. You generally need excellent credit, a high income and a low debt-to-income ratio to qualify for the highest loan amounts.