Can I get a loan online?

How do online personal loans work?

An online lender streamlines the process of getting a loan. The time from application to funding is usually a matter of days (even faster with some lenders). And you can complete the whole process from the comfort of your living room. If you are looking for an unsecured loan (one that doesn’t have a guarantee that a lender can take if you don’t pay), an online lender offers a fairly simple process.

Here’s how it works:

  • You complete an online loan application. Include basic information such as your name, social security number, employment status, and income. (If you’re unemployed, see our guide to getting a loan while you’re unemployed for more information on what to report as income.)
  • The lender may ask you what you plan to do with the loan. For example, the lender wants to know if you need the funds to renovate your home, consolidate debt, or pay off high-interest obligations like a title loan or credit card debt.
  • The lender checks your credit history. It will run a “soft” credit check that has no impact on your credit score.
  • The lender approves or denies your application based on the credit check. If denied, the lender is required to let you know why.
  • Once you are approved, the lender makes you a loan offer. It includes the interest rate, loan term options, and any additional fees, such as origination fees or prepayment penalties.
  • You should compare several loan offers. Then you can notify a lender when you are ready to proceed.
  • The lender will proceed with a “firm” credit request when you give the to chase. This will verify that your financial information is still accurate. The rigorous credit check will lower your credit score slightly, but your score will rebound with regular monthly payments.
  • The lender may request additional documents. For example, they may ask for photo ID, income verification, or tax records. You can simplify the process by having documents (like pay stubs and tax returns) ready when you apply.
  • You sign a contract and wait for funding. The loan proceeds are deposited into your bank account in one to 14 days, depending on the lender.

Personalize your loan

Like a traditional lender, an online lender offers many options to help you personalize your borrowing experience. For instance:

choose your Repayment period. If you need to keep your monthly payment low, choose a longer repayment term. If you want to save money on interest payments, choose a shorter repayment term.

Choose a loan that matches your credit score. Whether you have great credit, bad credit, or something in between, there’s a lender that specializes in loans for you.

Opt for automatic payments. Not only does autopay ensure that all payments are paid in full and on time, but many lenders offer a discount on interest rates to borrowers who sign up for autopay.

Decide if you want to consolidate banking services. If you want a savings account and checking account with the same financial institution, some online lenders offer banking services in addition to personal loans.

Advantages and disadvantages of online loans

Because there is no single financial decision, it is important to weigh the pros and cons. Here are some of the pros and cons of an online personal loan:


  • Simplifies the personal loan process
  • Advanced technology makes application easy
  • Often faster to obtain than a traditional loan
  • Some of the lowest APRs in the personal loan industry
  • Easier to get a debt consolidation loan to get rid of high interest rate debt like payday loans
  • You can build up credit by making regular monthly payments

The inconvenients

  • Some lenders offer high minimum loan amounts, making it difficult to get a small loan in an emergency
  • If you need a loan for bad credit, you will probably be hit with a high interest rate
  • You may need to work with a physical lender If you want a secured loan (a loan where you put up collateral to protect the lender’s investment)

What are the best online lenders?

As with any personal loan, you want to work with a professional and reputable lender. These four lenders are our 2022 personal loan award winners:

  • LightStream: Best Overall Personal Loan and Best Low Interest Personal Loan
  • SoFi: Best personal loan for good credit
  • Upgrade: Best Personal Loan for Fair Credit
  • Upstart: Best Personal Loan for Bad Credit

Alternatives to online loans

If you look around and decide it’s not the right time to take out a personal loan online, you have a choice. Here are two.

0% promotional rate credit card

If you have a good credit rating, you may qualify for a credit card with a promotional 0% APR. The best 0% intro APR credit cards generally offer the cardholder 12 to 18 months to pay off the debt without paying interest.


If you are a member of a credit union, you are considered an owner (or shareholder). As a homeowner, you have access to low loan interest rates and excellent terms.

Although online loans are a relatively new phenomenon, millions of people have borrowed money from the comfort of their homes. If you are looking for a loan, it pays to check out what online lenders have to offer.

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