I want a loan — how long will it take to get my money?

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The Credible Money Coach explains how long it can take to close on different types of loans. (Credible)

Dear Credible Money Coach,

How long does it take to close on a loan from start to finish? — Mary Ann

Hi, Mary Ann. Thanks for your question! How long it takes to get a loan varies depending on the type of loan, your financial situation, and even underwriting requirements that are out of your control.

Let’s look at how these factors could affect how long the loan process takes, from applying to getting the money.

Time frames for different types of loans

The type of loan you apply for can have a significant effect on how long it takes to get funds, and much of that time difference has to do with risk and paperwork.

Mortgage loans and refinances

Since mortgages are large loans, they're a significant risk for lenders. They must complete a lengthy and costly foreclosure process if you default. They could lose hundreds of thousands of dollars if a mortgage doesn't get repaid as agreed.

Therefore, mortgage lenders vet borrowers carefully, which could take at least 30 days to close a loan. Depending on your financial situation and the amount you want to borrow, getting a mortgage could take much longer, such as 45, 60, or even 90 days.

Personal loans

While it generally takes less time to get approved for a personal loan, the time frame varies depending on your credit, the amount you want to borrow, and the lender.

It typically takes one to five business days to close a personal loan, although some online lenders may deposit your funds as soon as the same or the next business day.

Student loans

In general, it takes two to 10 weeks to get a student loan. If you apply for a federal student loan, you must complete the FAFSA, or Free Application for Federal Student Aid. 

However, getting your student loan funds may take longer because they typically aren't disbursed until a week or two before the semester. And lenders usually send funds directly to your school for private and federal student loans.

Auto loans

If you apply for dealer financing when you buy a car, the approval process typically gets compressed into a couple of hours. If you go through a bank or credit union to get pre-approved before shopping for a car, it can take a few days to get the funds.

Short-term loans

There are various short-term loan options if you urgently need cash, such as payday loans and title loans. Because of the fees associated with payday and title loans, their effective annual percentage rate, or APR, can be in the range of 400%, according to Consumer Financial Protection Bureau research.  

With a payday loan, you may have to repay it as soon as your next paycheck. If not, your balance can roll into a new loan with additional fees, becoming even more challenging to pay off. Therefore, use extreme caution and only use a short-term loan when you have nowhere else to turn.

Your credit and finances

While having good credit may not get your loan application processed faster, it helps you get the best rates and terms. Here are more tips to make your loan application go smoothly:

  • Pay down debt. Having relatively low debt balances reduces your credit utilization ratio, boosting your credit score.
  • Pay your bills on time. Having a good payment history is the most critical factor for maintaining an excellent credit score.
  • Watch your debt-to-income ratio (DTI). Most mortgage lenders have strict DTI limits you must meet for approval.
  • Prepare your documents. Before applying for a loan, find out what's required, such as a W-2, bank statements, and tax returns. Having your paperwork ready will save time.

A final word

No matter how quickly you can get a loan, it’s a good idea to comparison shop — check rates and terms from multiple lenders — before committing to any credit product. Rates, terms, and fees can vary significantly from lender to lender. They can also change depending on the type of loan. Comparison shopping can help ensure you get the best deal available to you.

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Need Credible® advice for a money-related question? Email our Credible Money Coaches at moneyexpert@credible.com. A Money Coach could answer your question in an upcoming column.

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About the author: Laura Adams is a personal finance and small business expert, award-winning author, and host of Money Girl, a top-rated weekly audio podcast and blog. She’s frequently quoted in the national media, and millions of readers and listeners benefit from her practical financial advice. Laura’s mission is to empower consumers to live richer lives through her speaking, spokesperson, and advocacy work. She received an MBA from the University of Florida and lives in Vero Beach, Florida. Follow her on LauraDAdams.com, Instagram, Facebook, Twitter, and LinkedIn.