How to Get a Personal Loan: A Quick and Easy Checklist

Last updated Apr 2, 2025

Personal loans can be a great way to consolidate debt, pay off high interest rate credit cards, or cover a financial emergency. But if you’ve never taken out a loan before, you might not be familiar with personal loan requirements or how to apply for one.

Fortunately, applying for a personal loan is pretty straightforward. In fact, many financial institutions, like Upgrade, offer a quick online application process and fast funding upon approval.

Want the play-by-play? Check out our personal loan checklist for five simple steps to obtaining a personal loan through Upgrade or another loan provider.

Step 1: Know what a personal loan is (and isn't)

If you’ve never taken out a personal loan, take time to understand what it is and how it works compared to other credit products.

Personal loans are installment loans, so they’re in the same family as auto and student loans. Unlike credit cards, which have variable interest rates and no fixed payment term, personal loans come with a fixed rate and term. That means you have a finite period of time to pay it back and can circle the date on your calendar for when it will be paid off.

Personal loans typically range in size from $1,000 to $50,000 with terms from two to five years. After your loan is approved, you'll receive a lump sum up front and then make monthly payments until the loan is paid in full.

Step 2: Assess your credit and current financial situation

Your credit score is an important factor in determining your loan eligibility, so it helps to know what kind of shape it’s in before you apply for a personal loan. Start by pulling your credit report and reviewing for any errors. Next, check your actual credit score—a higher score gives you a better chance of qualifying for the amount you want and scoring a lower interest rate, which can save you money in the long run.

A lower score may make it harder to receive a low interest rate or get approved for a loan. If yours isn't up to par yet, build up your score before you apply by improving one or more of the factors that can impact your credit score

In addition to your credit score, lenders will also assess your debt-to-income ratio (DTI). DTI measures how much you owe each month compared to how much you earn. Many lenders use DTI to judge your ability to manage your monthly payments. The lower your DTI, the less risky you appear to lenders. Finally, lenders may also look at some factors beyond your credit report and score.

Step 3: Get pre-qualified and prepare for personal loan requirements

Many lenders allow you to pre-qualify for a personal loan, which means you can start the process with just a little bit of information. Personal loan requirements vary by lender, but pre-qualification typically requires information like:

Loan amount
Loan purpose
Annual income
Monthly debt obligations
Employment information

One of the benefits of pre-qualification with Upgrade is that you can check your rate in minutes without filling out a full application. When you check your rate through Upgrade, a soft credit pull is performed at the pre-qualification stage, which means you see how much you qualify for without harming your credit score.

Step 4: Choose an offer that fits your budget

Once you’ve received a few offers, it's time to compare monthly payments, interest rates and payment terms. Review your disposable income and determine an amount you can comfortably afford to pay toward the loan each month. Remember that missing or late payments can hurt your credit score.

Payment term, or how long it will take you to repay the loan, will affect how big your monthly payments are. Generally speaking, a longer term means lower monthly payments but also a higher interest rate, while a shorter term means higher monthly payments but a lower interest rate. Do the math before deciding—while a smaller monthly bill may sound nice, a longer term will cost you more money in the long run.

Finally, read the fine print to avoid any surprises. Check to see if there is a pre-payment penalty for repaying your loan early, and be sure the lender has disclosed the total cost of your loan, which may include origination fees.

Step 5: Finalize your loan

Sometimes you’ll be asked to provide additional documents so your selected lender can verify the information you provided. While these aren't always required to obtain a personal loan, having the following documents ready will help speed up the process:

Photo identification: A copy of a government-issued photo ID, such as a passport, driver’s license, or state identification
Verification of your home address: A copy of a recent utility bill or your lease
Proof of income: W-2 form, pay stubs, bank statements, or tax returns typically work for most lenders

Once you’ve completed all verifications required and they've been approved by your lender, you should receive your funds within a few business days; after you accept a loan offer through Upgrade, you can expect to get your money within 1 business day of clearing verifications. Be sure to check your email or Upgrade dashboard for any document requests, since we may ask for certain documents to verify your identity before finalizing the loan. If possible, set up a monthly auto-payment from your checking account to avoid missing a payment.

Personal Loan Checklist: Final Thoughts

A personal loan can be a valuable tool for covering emergency expenses, rebuilding credit, consolidating credit card debt, or achieving other financial goals—but you should only take out what you know you can pay back. Take time to look at all your options before committing to a loan, and make sure you’re confident that you can repay it over time.