How to Pre-Qualify for a Loan

Whether you’re ready to embrace the ornate wallpaper trend or just want to consolidate credit card debt, a personal loan can be a useful financing option. But rates, terms, and eligibility requirements can vary between lenders, making it difficult to find the best deal. 

Pre-qualifying for a loan can allow you to view potential rates and give you an idea of how much you can borrow. By learning how to pre-qualify for a loan, you can get personalized quotes and find the right offer. 

What You Need to Get Pre-Qualified for a Loan

Personal loan pre-qualifications are typically very simple; You can fill out an online form and view your options within minutes. To get pre-qualified for a loan, a lender will typically ask for the following information: 

• Desired loan amount: Enter the amount of money you want to borrow, such as $10,000 or $25,000. 
• Personal information: The lender will need your name, address, and contact information. 
• Social Security number: Most lenders require a valid Social Security number to view your loan options. 
• Employment: The form may prompt you to enter your employment information, including your income, employer’s name, and employer’s contact information. 
• Loan purpose: Rates and terms may depend on the loan’s use, so the lender may ask you to enter the intended purpose for the loan. Common options include debt consolidation, medical expenses, and home renovations.

How to Pre-Qualify for a Loan

Follow these steps to pre-qualify for a loan; the same basic instructions will work for most loan types, including personal loans, auto loans, student loans, and business loans.

1. Research Multiple Lenders

Many lenders offer personal loans for multiple purposes. Loan terms and annual percentage rates (APRs) can vary, so it’s wise to shop around with several lenders.

2. Fill Out the Pre-Qualification Form

Once you’ve narrowed down your list of lenders, you can request pre-qualifications from each one. You can fill out the pre-qualification forms online and view potential loan options, and you’ll be asked to provide the following: 

• Your personal information
• Your Social Security number
• Details about your income and employment
• Your requested loan amount and its intended use

3. Submit Your Pre-Qualification Application

After filling out the form, the lender will usually ask for your consent to its terms of use or electronic pre-qualification agreement. Be sure to look for a statement that the lender will perform a soft credit inquiry, which will not affect your credit. 

If you agree to its terms, check the corresponding box and submit your loan pre-qualification application. The lender will process the pre-qualification within minutes, and you can view available loan options. 

Best Loans With Pre-Qualification

*APRs are accurate as of publication.

Benefits of Loan Pre-Qualification

There are several benefits to pre-qualifying for a personal loan: 

• You’ll get a better idea of how much you can borrow: Although you may have a dollar amount in mind, you may qualify for less than you expected based on your credit or income. A loan pre-qualification will give you a ballpark figure of what you can borrow. 
• You can see available loan terms and monthly payments: When you pre-qualify for a loan, the lender will list the available loan terms for your desired loan amount and credit. By viewing the actual options you could qualify for, you can find out how much your monthly payments would be. 
• You can compare realistic rates: On their websites, lenders list a wide range of rates. The lowest possible rates are limited to borrowers with excellent credit who typically choose short repayment terms. With a loan pre-qualification, you can get a better idea of the rates you’ll end up paying. 
  

How to Increase Your Odds of Approval

Before applying for a personal loan, you may increase your odds of qualifying—and securing a better rate—by following these tips: 

• Add a co-signer or joint applicant: Some personal loan companies allow you to add a co-signer or joint applicant to your loan application. Adding a creditworthy co-signer or co-applicant improves your chances of qualifying for a loan. 
• Pay down existing debt: Paying down the balances on your existing debt, particularly your credit cards, will reduce your credit utilization and potentially raise your credit score. 
• Limit new inquiries: Hard credit inquiries can cause your score to drop by several points, so only apply for new credit when you really need it. 
• Make payments on time: A history of making payments on time is the biggest factor affecting your credit. Make all of your payments on time to establish good credit. 

Applying for a Loan

After submitting your pre-qualification request, the lender will show you available loan options. If you find a loan that works for you, you can proceed with the loan application. 

Pre-qualification offers typically have limited lifespans; they expire within 14 to 30 days, so plan to act quickly if you want to move forward. Otherwise, the offered interest rate may change.

When you complete an application for a personal loan, the lender will ask for additional information, such as a copy of your driver’s license, proof of income, and your bank routing and account numbers. The lender will also usually ask for your consent for a hard credit check. The review process can take longer than the pre-qualification did, but you can usually expect a decision—either approved or denied, or a request for more information—within a few hours.