Personal loans are a popular way to consolidate debt, fund home projects or cover major expenses.
But they come with restrictions, risks and fees — and borrowers need to provide more documentation than they do with credit cards.
How to apply for a personal loan
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Step 1: Decide how much you need
Loan amounts can vary widely depending on the lender. Credit union offers personal loans starting at around $600 and going up to $50,000, for example, while LendingClub sets its minimums closer to $1,000 and caps its loans at $60,000.
Credit union membership is available to anyone and low amount offerings are as low as $600.
- Credit union membership available to anyone
- Loans as low as $600
- Can pick up a physical at a branch
- May apply with a co-borrower
- Funds come as a physical check
- Must be a member to get funds (no membership needed to apply)
- Must pay for expedited shipping to get your funds next day
- Maximum loan amount of $50,000
- Late fee of $29
LendingClub Personal Loans
Annual Percentage Rate (APR)
8.98% to 35.99% APR
Loan purpose
Debt consolidation, major expenses, emergency costs, moving, weddings
Loan amounts
$1,000 to $40,000
Terms
24 or 60 months
Credit needed
Good
Origination fee
3.00% to 8.00% of the loan amount
Early payoff penalty
None
Late fee
15-day grace period to make payments with no penalty
See our methodology, terms apply.
Pros
- Co-borrowers are permitted
- No prepayment penalty
- Loan amounts as low as $1,000
- Quick application you can submit in just a few minutes
- Ability to check your rate without hurting your credit score
Cons
- Doesn't accept co-signers
- Origination fee of 2% to 6% of the loan amount
- Only two loan terms to choose from (3 or 5 years)
Step 2: Prequalify and compare offers
Once you know how much you need, you'll want to do some research and compare the rates and fees of different personal loan providers. An easy way to get started is with CNBC Select's personal loan comparison tool:
Lenders like LightStream and Happy Money also have prequalification forms on their websites. Select chose LightStream as one of the top options for personal loans because of its low interest rates and flexible terms.
LightStream Personal Loans offer low APRs, no fees and the ability to apply online. Its terms are as long as 20 years, or 240 months.
- Same-day funding available through ACH or wire transfer (conditions apply)
- Loan amounts up to $100,000
- No origination fees, no early payoff fees, no late fees
- LightStream plants a tree for every loan
- Requires several years of credit history
- No option to pay your creditors directly
- Not available for student loans or business loans
- No option for pre-approval on website (but pre-qualification is available on some third-party lending platforms)
Peer-to-peer lending platform makes it easy to check multiple offers
- Peer-to-peer lending platform makes it easy to check multiple offers
- Loan approval comes with Happy Money membership and customer support
- No early payoff fees
- Fast and easy application
- U.S.-based customer service
- Higher loan minimums ($5,000)
- Must submit soft inquiry to see origination fees and other details
Submitting an application to prequalify is a "soft inquiry," so it shouldn't hurt your credit score.
You'll need to provide the following information:
- Name, date of birth, address and Social Security number/tax ID
- Annual income
- Basic financial information (rent/mortgage payment, other major bills)
- Requested loan amount and ideal term length
Review your available offers and select the one that best suits your timeline and budget.
In general, the better your credit score, the more favorable your loan terms will be, though it is still possible to get a personal loan with bad credit.
Upstart offers some of the easiest personal loans to be approved for because it considers factors beyond just your credit score, including education, employment and work experience.
Upstart offers accessible personal loans for people with fair or average credit.
- Accept applicants with low or no credit
- No early payoff fees
- Most loans funded the next business day
- High late fees
- Origination fee of 0% to 10% of the target amount
- $10 fee for paper copies of loan agreement
Step 3: Gather documents and submit the application
Once you have reviewed your loan options, submit a complete application. Ideally, you should do this only once, as it's a hard inquiry on your credit report and will temporarily lower your score.
The necessary paperwork for a full application varies by lender, but typically, you need:
- Recent paystub(s)
- Checking account statements for the past three to six months
- Photo ID
- Proof of address
- Education history (including highest level/degree achieved)
- Other financial info (retirement account statements, outstanding debts, investment assets, etc)
- Preferred bank account for direct deposit
If you have a co-signer for your loan, they'll need to provide most of the same documents.
Step 4: Wait for approval and funding
Approval can be received within an hour or may take up to 10 business days, depending on the loan size, lender, credit history and other factors.
Once approved, the funds are typically deposited into your bank account, minus any origination fees. If direct deposit isn't available, your lender will mail a paper check.
For a debt consolidation loan, you may be able to have the funds sent directly to your creditors.
Most personal loans offer repayment terms ranging from six months to seven years. Your first payment is typically due within 30 days of receiving the funds.
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Why trust CNBC Select?
At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every article is based on rigorous reporting by our team of expert writers and editors, who possess extensive knowledge of personal loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any outside third parties, and we pride ourselves on maintaining high journalistic standards and ethics.
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