Personal loans are one of the fastest forms of financing you can get, making them perfect for unexpected expenses. But just because many lenders can turn around a loan agreement in as little as one or two business days, that doesn’t mean they’re not thorough in their underwriting processes.
If you want your personal loan funds disbursed quickly, it’s important to have your personal loan documents organized and ready before submitting your application. This guide will walk you through what loan documents you should gather.
In this guide:
Personal loan documents you’ll need to provide
Most lenders will require the same basic information and financial documentation in order to evaluate an applicant. If you’re planning to apply for a personal loan, here’s what you should have on hand.
Your lender will need to verify your identity using some form of government-issued ID. In most cases, you will need at least two forms of identification ready.
Here are the acceptable forms of ID that most lenders will accept:
- Valid driver’s license
- U.S. passport
- Birth certificate
- State-issued ID card
- Citizenship certificate
- Military ID
- Utility bills (with an address matching that of your ID or license)
Proof of address
Most lenders will also require proof of your physical address. Sometimes this is due to state laws and residency requirements, or sometimes it may be to determine your overall loan eligibility.
These documents are typically acceptable ways to prove your address:
- Utility bills
- Proof of home or rental insurance
- A voter registration card
- A lease or rental contract
- Change of address card from USPS
Proof of income
Your lender is going to want to verify your income to ensure you can make your payments and repay your debt—especially if you’re self-employed. To do this, they will look at your earnings and employment for at least the last two years (sometimes more).
They will also use this data to determine your debt-to-income ratio—or how much your current monthly debts are in relation to your income—to gauge how much loan you can take on. Most lenders want to see a DTI of 43% or lower before approving your loan application.
To prove your income, you may need to provide your lender with:
- Recent bank statements
- Copies of your last two tax returns
- Copies of your last two W-2 forms
- Recent pay stubs from your employer
- An employment verification form signed by your employer
Other documents that may help
The above documentation is typically required by all lenders, regardless of the loan you’re getting or your financial qualifications. In some cases (if you lack a strong credit history, for example), you may also need the following documents in order to qualify for your loan.
Proof of assets
A lender may want to see evidence of your assets—especially liquid ones that can be easily converted to cash in case you fall behind on your loan. Proof of assets is often required on unsecured loans (loans that aren’t backed with collateral, as a mortgage or car loan is).
Here are some documents that can help lenders verify your assets:
- Bank account statements
- Investment account statements (401Ks, IRAs, etc.)
- Brokerage account statements
- Property deeds
- Car titles
- Stocks and bonds
Proof of financial responsibility
If you don’t have a strong credit history yet (you’ve never opened a credit card account, you’re a recent grad, newly emigrated resident, etc.) you may need to prove your ability to manage finances responsibly.
To do this, you can provide your lender with:
- Proof of rent payments (copies of cleared checks, etc.)
- Phone bill statements
- Utility bill statements
- Car insurance statements
Questions you’ll need to answer
In addition to requiring various forms of loan documentation, most personal loan lenders will also ask you a number of questions in order to assess your finances and ability to repay the loan. The following are some of the questions you should be prepared to answer.
What is your credit score?
Your credit score is a reflection of your risk and the likelihood you’ll stay current on your loan payments. You’ll likely need to tell your lender your score (or at least a general range) during the loan application process.
Once you’re pre-qualified, your lender will run a check on your credit report to verify your score before underwriting your loan.
As a general rule, good credit scores typically qualify you for more loans at lower interest rates. Low credit scores do the opposite.
How do you plan to use the funds?
Your lender will want to know what you plan to use the funds for, too. Though personal loans can be used for virtually anything, most lenders have some limitations in place to protect themselves from added risk.
For example, some lenders won’t allow personal loan funds to be used for paying off student loan debts (they might have student loan programs for those purposes). Others may use your intended purpose to determine your interest rate, loan amount, and other loan terms.
Bottom line: Get organized before applying
Getting your paperwork in order is critical before applying for a personal loan. Not only can it help ensure your application is successful, but it can also help speed up the process.
Don’t forget to consider how taking out a personal loan will impact your budget, too. Use our personal loan calculator to determine how much your monthly payment and interest costs will be, so you can see how much you can afford to borrow.