Personal loans are one of the most preferred choices of Credit. The market size of the personal Loan industry in the UK was a solid £ 37.7 billion in 2022. Despite the rise in interest rates, this market showed a growth of 8%. They might buy cars, pay for education, purchase electronic gadgets, or many other purposes. Personal loans can be an important part of your personal finance plan.

If you have applied for a personal loan, or are planning to apply, you might have a few more questions. You might be wondering how long does it take to process a personal loan? What’s the process? What do you need? The processing time of personal loans can vary depending on the lender. For instance, banks might disburse loans within 1 to 5 days. Some online lenders provide same day loans as well.

How much time it takes to get a personal loan?

Personal loan processing time varies according to the type of lender. Primarily three types of lenders offer personal loans: banks, online lending companies, and credit unions.

1. Banks

Banks tend to have strict eligibility requirements and longer verification processes. If you have applied for a personal loan with a bank, you can expect to receive the money within 1-5 business days. However, this duration can be different for every bank. Some banks have also come up with loan products that have a shorter processing time. For instance, pre-approved loans may get approved faster.

2. Credit unions

Credit unions are financial co-operatives owned by their members. They provide loans, investment opportunities, and other financial services for members only. You have to join a credit union before applying for a loan. Credit unions can take up to 10 business days to approve a loan.

3. Online lenders

Online direct lenders and companies often have shorter loan approval processes. They have lenient eligibility criteria and have fast and digitised processes. Some companies advertise same-day funding or next day funding as well. The average personal loan processing time can vary between 1 to 3 business days. You can also access guarantor loans from an online financial institution. Other loan types include payday loans.

Understanding the personal loan approval process

If you are wondering how long does it take to get a personal loan? Start by understanding the personal loan approval process. It will give you an idea about the possible processing time and why it takes so long to approve a loan.

Step 1: Application

The first step is submitting a loan application to your lender. Most lenders have digitised this process to reduce the processing time. You are asked to fill up an online application. Lenders require your personal information such as name and address. You are also required to attach documents like a proof of residence, a copy of your driver’s license, etc.

Step 2: Verification and approval

Once you submit your loan application, the lender verifies the details filled in along with your documents. If you have filled in the information correctly, this step will be completed faster. If they find any errors, inconsistencies, or missing fields, your application will be sent back for correction.

The lender checks the genuineness of your documents and runs credit checks to judge your creditworthiness. They ensure that you satisfy their eligibility criteria for the loan. The criteria could include minimum age, income, or credit score.

Post the verification, the loan is either approved or rejected.

Step 3: Disbursement

After approving the loan, the lender transfers the money to your account. The process of disbursement gets completed within 1-5 business days after approval. However, keep in mind that this is an approximate time frame and varies according to the lender.

How to speed up your personal loan processing time?

If you require the loan amount urgently, there are a few steps you can take to speed up the processing time of your loan.

1. Choose your lender wisely

As we discussed above, the personal loan processing time varies with each lender. The first step is to choose a lender with faster approval processes. Most lenders mention their approximate loan processing time on their websites. If you do some research, you will be able to find online lenders that provide personal loans within one day. Prefer a lender with digitised processes because they tend to be faster than physical approval processes.

However, ensure that you are choosing a legitimate lender to avoid falling for any loan scams. Here is a list of direct lenders in the UK, who are authorised to provide loans to borrowers.

Read this article about how to find out if a loan company is legit or not for more tips.

2. Fill up your application correctly

Personal loan application processes can get delayed because the loan form wasn’t filled up correctly. If you have left a crucial field blank with an online lender. Or have you made a mistake when you apply online? If you make a mistake, your online lender will have to revert the application back to you for corrections.

This adds an extra business day to your personal loan processing time. Spending just a few minutes triple checking the info can save a lot of time.

Always double-check your loan form to avoid this delay. Make sure that you have filled all fields, and that the information is correct. Many online lenders have helpful info to help you complete their form.

3. Review your credit report for errors

It’s crucial to check your credit report in detail before you submit your application. Occasionally, you may notice that your credit report has some errors or inconsistencies. Possible errors in credit reports include incorrect personal information or closed bank accounts shown as open accounts. It could also show an inaccurate payment history some car title loans that you don’t have.

Such mistakes can lower your credit scores unnecessarily, which can cause delays in the application process. If your credit score has fallen, your bank or credit union can reject your application. They may not want to loan money to you. This can hamper you if you’ve applied with one of the traditional banks.

You could also spot signs of identity theft. Or some other loan fraud by reviewing your credit report. For instance, you could notice records of payday loans that you never applied for. You might also see pawn shop loans that you didn’t apply for.

If you spot any such error, inconsistency, or fraud, you can report it to the credit reference agencies. You should ask them to get it corrected before submitting your application.

4. Look for a pre-approved loan

Before you start your application process, see if you are eligible for a pre-approved loan. Although it doesn’t guarantee approval, the application process for a pre-approved loan could be shorter. If you are pre-approved for a loan, the lender has already checked your preliminary information. So, you will likely get a loan. However, your application will be approved only if you meet the eligibility criteria and pass the credit check.

If you have a good credit score, a positive credit history, and meet the eligibility requirements, consider getting a pre-approved loan. Most lenders provide an eligibility checker tool on their website. You can enter your basic information to check whether you are eligible for a personal loan.

5. Check your credit score

It is crucial to check your credit score before you initiate the loan process. Most lenders set a minimum credit score limit that one must achieve to get a personal loan. If you have a poor credit score, there is a high chance that your application will get rejected.

Your credit score will also impact your choice of lender. For example, if you have a poor credit score, you will look for a lender who offers bad credit loans.

Check your credit score with each credit reference agency as they might differ from each other. There are three major credit reference agencies in the UK: Experian, Equifax, and TransUnion. Find out what is the fair credit score in the UK for different credit reference agencies.

6. Apply online

Most lenders have set up fully digitised processes to enable borrowers to apply from the comfort of their homes. Applying for a loan online can save you a significant amount of time. A physical application process is more time-consuming.

7. Check the eligibility criteria before applying

Each lender specifies eligibility requirements for personal loans. They may specify minimum credit score, monthly income, age, or even work experience. If you do not fit into this criteria, your loan could be delayed or even rejected.

Visit the website of your bank or credit union and check their eligibility criteria before you submit your application. By doing this, you can apply to a lender whose eligibility criteria you can satisfy. Otherwise, you can take steps to fulfil the requirements if possible.

8. Keep your documents ready

Lenders specify the documents that applicants need to submit along with their applications. They require your proof of residence, proof of age, driving license, proof of identity, etc. Make sure that you have all the required documents in hand before you submit your application. If you forget to submit a crucial document, your bank or credit union will either revert your application for corrections or reject it.

Having the documents ready beforehand will speed up the approval process, and you will be able to get your personal loan funds within time.

Summing up

How long does it take to get a personal loan? The answer depends on your lender and whether you satisfy their eligibility criteria or not. Subject to these factors, your loan process should be completed within 1-7 business days approximately. You can speed up this process by submitting correct information, checking your credit score in advance, getting pre-approved for a loan, and implementing other strategies.

Frequently asked questions

Disclaimer: The information given above is provided for reference only. This is not financial advice.

Related guides:

A Detailed Guide About Pre Approved Loans

What Documents Do I Need for a Secured Loan in the UK