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Personal Loan Requirements: What Do You Need to Apply

Matthew Levy Updated: February 5, 2024 • 7 min read

Key Points:

  • To approve your loan application, lenders require documents that prove your identity and financial information.

  • You'll be asked to provide are copies of your state- or government-issued ID, paystubs, tax returns, and bank statements.

  • By having these documents on hand, the application process will be smoother and your chances of getting approved sooner will increase.

To improve your chances of securing a loan, a lender requires certain personal loan documents to authenticate your identity and evaluate your financial status. Having these personal loan documents readily accessible not only streamlines the application process but also accelerates the approval timeline.

What Do You Need for a Personal Loan

The requirements for a personal loan are not just formalities but key indicators of your ability to repay the loan. These prerequisites can streamline your application process and increase your chances of approval.

1. Valid ID Proof 

To validate your identity and legal standing.

  • Government-Issued Photo ID: This is the most commonly accepted form of identification. It includes a driver's license, passport, or a state-issued ID card
  • Social Security Number (SSN) or Tax Identification Number (TIN): Lenders may also request your SSN or TIN to verify your identity and assess your creditworthiness
  • Proof of Address: Some lenders may require documents that confirm your current address. This can include utility bills, rental agreements, or a voter registration card
  • Proof of Age: In some cases, you may be required to prove your age, especially if it's a specific requirement for the type of loan you're applying for
  • Employment ID: If applicable, you might need to provide your employee ID or a letter from your employer as part of the verification process

2. Employer and Income Verification 

To confirm your employment status and income level, ensure you have the means to repay the loan.

Employer Verification:

  • Employment Verification Letter: Some lenders may request a letter from your employer confirming your employment status, job title, and, in some cases, your income. This letter is typically provided on company letterhead and signed by an authorized representative.
  • Payroll Contact: Lenders might contact your employer's payroll department or human resources to confirm your employment and income details.

Income Verification:

  • Paystubs: Recent paystubs are often required to demonstrate your regular income. These documents detail your earnings, deductions, and taxes
  • Tax Returns: If you're self-employed or have variable income, lenders may request copies of your tax returns for the past one or two years to assess your overall income
  • Bank Statements: Providing bank statements can help verify your income, especially if you have additional sources of income or irregular paychecks

W-2 Forms:

If you're employed, lenders may ask for your W-2 forms, which summarize your annual earnings and tax withholdings

1099 Forms:

If you're a freelancer or independent contractor, you may need to provide 1099 forms from clients or businesses that paid you for your services.

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3. Proof of Address 

To establish residency and contact information.

  • Driver’s license/Insurance card 
  • Utility bill
  • Property Tax Receipt 
  • Lease or rental agreement/Mortgage statement
  • Voter registration card
  • Bank or credit card statement
  • College enrollment papers

4. Loan Application

A loan application form is a standardized or customized form used by borrowers to apply for a loan from a financial institution, such as a bank or credit union. This form serves as the initial step in the loan application process and collects essential information from the borrower. It typically includes details such as the borrower's personal information (name, address, contact information), financial information (income, employment, expenses), the purpose of the loan, the requested loan amount, and any collateral that may be offered.

The loan application document is submitted to the lender for review, and it plays a crucial role in the lender's assessment of the borrower's creditworthiness and ability to repay the loan.

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Additional Considerations During the Loan Approval Process

Here are some common personal loan qualifications that lenders consider:

  1. Credit Score: A high credit score is often required, indicating that the borrower has a history of paying their debts on time. The required score can vary, but typically, a score above 600 is preferred, with better terms offered to those with scores above 700.
  2. Income: Lenders need to verify that you have a steady income to ensure that you can make the monthly loan payments. They may require pay stubs, bank statements, or tax returns as proof of income.
  3. Debt-to-Income Ratio (DTI): This ratio compares your monthly debt payments to your monthly income. A lower DTI shows that you are not overly burdened by debt and are more likely to manage additional loan payments. Typically, lenders look for a DTI of 40% or lower.
  4. Employment History: A stable employment history indicates a steady income, making you a less risky borrower. Lenders may require details about your employer, length of employment, and income stability.
  5. Collateral (for secured loans): While not all personal loans require collateral, secured loans do. Collateral can be an asset like a car or a home that the lender can seize if you fail to repay the loan.
  6. Co-signer (if applicable): If your credit history or income is not sufficient to qualify on your own, some lenders allow a co-signer. A co-signer with a strong credit profile and income can increase your chances of approval and possibly secure better loan terms.
  7. Purpose of the Loan: Some lenders may inquire about the purpose of the loan to assess its risk. For instance, a loan for debt consolidation may be viewed differently than a loan for a vacation.
  8. Age and Residency: Most lenders require borrowers to be at least 18 years old and a resident or legal citizen of the country where the loan is being issued.

What Do You Need to Apply for a Personal Loan

When taking out a personal loan, it is essential to set goals realistically to ensure that your application is quickly processed. First and foremost, it is critical to determine beforehand how much you want to borrow and the type of personal loan you want, whether secured or unsecured.

First, it is vital to establish your debt-to-income ratio, which is your total monthly debt payments divided by your total income. Usually, lenders prefer a ratio of less than 0.4, which means your total mortgage/loan payments should be less than 40% of your income. 

You may also want to consider how much you can afford to pay, considering all the penalties and fees involved if you cannot settle your loan on time. Consider all costs, like processing, repayment, and late payment fees when borrowing. 

Check your credit score to determine your creditworthiness before applying for a loan. It will help you compare different interest rates for your credit score range. A lower credit score may result in rejection, while frequent credit score checks can further dampen your credit score. Make sure to apply for loans from lenders that accept your credit score range. 

How to Apply for a Personal Loan

  1. Assess Your Financial Needs: Determine the purpose and amount of the loan you need. Understanding your financial requirements will help you choose the right loan product.
  2. Check Your Credit Score: Review your credit report and credit score. A higher credit score can lead to better loan terms. You can access a free credit report annually from the major credit bureaus.
  3. Research Lenders: Explore various lending options, including traditional banks, credit unions, online lenders, and peer-to-peer platforms. Compare interest rates, terms, and eligibility criteria to find the lender best suits your needs.
  4. Prepare Required Documents: Gather the documentation lenders typically require, such as proof of identity (government-issued ID), proof of income (paystubs or tax returns), and bank statements. Some lenders may have specific document requirements, so inquire about them.
  5. Prequalification: Many lenders offer prequalification processes. This involves a soft credit check, which doesn't impact your credit score. Prequalification can provide an estimate of the loan amount and terms you're likely to qualify for.
  6. Select a Lender: After comparing lenders, choose the one that offers the most favorable terms and aligns with your financial situation.
  7. Complete the Application: Fill out the lender's loan application. You'll need personal information, employment details, and financial information.
  8. Submit Supporting Documents: Upload or submit the required documents to validate your application. These may include ID proof, income verification, and any additional documents the lender specifies.
  9. Review Loan Terms: Carefully examine the lender's loan terms, including the interest rate, loan duration, monthly payments, and any associated fees. Make sure you understand the terms fully.
  10. Wait for Approval: The lender will assess your application and documentation. The approval process can take several days to a few weeks, depending on the lender's procedures and the complexity of your application.
  11. Accept the Loan: If your application is approved and you are satisfied with the loan terms, you will receive a loan agreement. Thoroughly review the agreement, and if you agree with the terms, sign it.
  12. Disbursement of Funds: After accepting the loan terms, the lender will disburse the loan funds. This can be done through a direct bank transfer or by check.
  13. Repayment: Start repaying as specified in the loan agreement. Consistently pay on time to maintain a positive credit history.

Following the lender's specific instructions and requirements is important when applying for a loan. Make sure you can comfortably repay the loan before applying for one.


There is a lot to consider when applying for a personal loan. But, once you are sure of all the necessities, including personal loan documents, terms and conditions, the personal loan application becomes straightforward. The importance of a thorough personal examination cannot be overstated. It not only improves your chance of approval and helps you secure lower interest rates on your personal loans.


Can I get a personal loan without proof of income?

It's challenging but possible. Some lenders may consider other factors like credit score or collateral, but most require income proof.

Who is most likely to get approved for personal loan?

Individuals with good to excellent credit scores, stable income, and a low debt-to-income ratio are typically more likely to get approved.

Do personal loan lenders call your employer?

Yes, lenders may contact your employer to verify employment as part of the loan approval process, especially if there's insufficient documentation.

How long should I wait to apply for a personal loan?

The approval decision can be immediate with some online lenders, while others may take a few days.

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Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.