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After you’re approved for a loan, you’ll need to sign loan documents and have the funds deposited into your bank account. Read on for what happens next.
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Applying for a personal loan allows you to obtain funds you can use for a wide variety of purposes. Your ability to get approved is going to depend on many factors, including your income and credit. But once you have been approved, what happens?
Here’s what you can expect after you’ve been approved for a personal loan.
1. You’ll sign any required loan documents
Once you have been approved for your loan, you will need to sign documents accepting the terms and conditions and agreeing to repay the loan on schedule.
Be sure to read the fine print carefully so you understand what your interest rate is, what fees (if any) you will pay, when your first payment is due, how much your payments are, and whether there is any prepayment penalty.
If you are happy with the terms and confident you can pay back the loan as planned, sign the documents so you can officially move forward with the borrowing process. In most cases, you can do this online — especially if you applied for a loan over the internet.
2. You’ll specify where you want the money delivered
Next, you’ll need to tell the lender where to deliver the funds that you’re borrowing. In most cases, the easiest thing to do is to have the money electronically transferred to a checking account or a savings account. From there, you can do whatever you need with it.
You’ll likely need to provide your account and routing number to the lender in order for the money to be transferred.
3. You’ll receive your funds
Once you’ve told the lender where to send your money, it’ll initiate the process of actually transferring the money to you.
The length of time it takes to receive your funds can vary by lender. In some cases, you could get the money the same business day or within 24 hours. In other circumstances, it may take several days for the money to be delivered to you. When you apply for a loan, be sure to pay attention to the funding schedule different personal loan lenders provide if you know you’ll need the money quickly.
Once you have the money, you can use it to do just about anything you like with it, whether that’s paying off credit cards or other debt or financing a big purchase.
4. You’ll begin making payments
You will agree on a repayment schedule and repayment terms with your lender at the time you borrow. Typically, about a month or so after you’ve received your loan funds, you will need to begin making payments.
Each payment you send in will cover interest costs and pay down some of the principal. The more you borrow and the shorter your repayment term, the higher each monthly payment will be.
You’ll need to make sure you pay on time to avoid late fees and other consequences. If possible, consider setting up automatic payments so your lender is paid directly from your bank account each month.
5. Your payment history will be reported to the credit reporting agencies
Your personal loan lender should report the account and the payment history to the credit reporting agencies. If you build a positive payment record, it can help your credit score. If you pay late, it could hurt your score.
You’ll continue paying back your loan over time, and once you’ve made your last payment, you’ll be free of the debt, and your account will be reported as paid and closed.
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