At some point in our lives, most of us need to apply for a loan for various reasons. It could be to cover an emergency expense, buy a car, fund a vacation, or home improvements. Whatever the reason, applying for a loan online doesn’t need to be difficult. In fact, most lenders have processes designed to save time and hassle. You can apply online in just a few minutes and get access to your funds same-day in some cases. If you’re unsure how to apply for a loan online, this short guide tells you everything you need to know.
Documents you need to apply for a loan online
The first thing you need to do when applying for a loan is to gather all the documents that lenders want to see.
This will likely depend on the lender and type of loan, so do some research to see what lenders usually ask for. If you can gather all this documentation ahead of time, you’ll make your loan application speedy and straightforward.
Most lenders will want to see three things: proof of ID, proof of income, and proof of address.
Proof of ID
One of the first things lenders want to see is proof that you are who you say you are. This will determine whether you are a US citizen or a permanent resident and that you’re at least 18 years old (minimum age may differ per state).
Most lenders will ask for two forms of ID, which can be from the following list:
- Driver’s license
- State-issued ID
- Birth certificate
- Certificate of citizenship
- Social Security card
- Military ID
Proof of income
Lenders need to know that you can realistically afford the payments, so showing proof of income is crucial.
You can do this in the following ways if you’re employed:
- Pay stubs
- Bank statements
- Tax returns
- Third-party bank verification services
If you’re self-employed, you can prove your income with:
- Bank statements
- Income tax returns
Proof of address
Lastly, lenders need to know your address so they can determine your current financial status. They want to know that you have a permanent address and a stable lifestyle as this will affect if you can afford the loan payments.
You can use the following examples:
- Bank or credit card statement
- Utility bills
- Lease or rental agreement
- Proof of insurance on your home or vehicle
- Mortgage statement
- Property tax receipt
- Voter registration card
Questions you should be prepared to answer
Lenders may ask you some questions about the loan you wish to take out so you should be prepared for the following common questions.
Why do you need to borrow this money?
If it’s a personal loan, the reasons for borrowing can be pretty flexible but you should still be prepared with an answer. Some common answers are to fund an emergency car repair, consolidate debt, make home improvements, or fund studies.
In some cases, lenders may recommend a specific loan product that’s a better fit for you – for example, debt consolidation loans or car finance.
How much can you afford to borrow?
The next thing lenders need to know is how much you can afford to borrow. You can request a certain amount, however, lenders may compare this to your current income and may ask about your additional expenses to determine affordability.
What is your credit score?
Lenders want to know what your debt repayment behavior is like before they approve you. If you have a low score with some late payments on your record, the lender may still accept you but may apply a higher interest rate.
Be aware that once you start your loan application, the lender will do a hard credit check which may cause a minor dip in your credit score.
Where to apply for a loan online
There are countless lenders for different needs out there. You can try traditional banks or online lenders. The best thing you can do is shop around and find the best rates for you.
How long does it take to get your loan online?
This depends entirely on the lender and how fast you make your application. Some lenders specialize in approving and paying money within a day or two. Others might take a little longer. The good news is that you rarely have to wait a long time for a loan to come through thanks to modern application and approval methods.
Having all the documents you need already prepared will help to make the loan application process as smooth, simple, and fast as possible.
At Jora Credit, we have one of the fastest online application processes available today. Most applicants receive a decision within minutes. Plus, you can have funds in your bank account as soon as the same day as long as you accept your loan agreement before 10:30am CST. Apply now to get started.