Loan disbursement: how long does it usually take?
Find out how to prepare for your upcoming funds and what to expect.
Whether you took out a personal loan to consolidate and pay off debt faster, for a new purchase or to cover the expenses after an unexpected event, it’s important to be aware of how long it takes to find out if you were approved, how long it takes to receive your funds and how you can prepare for it.
Here are some of the most common questions we get regarding loan disbursement and the best steps to take:
How do I prepare to take out a loan?
According to NerdWallet.com, there are six steps to follow in order to get a loan.
- Check your credit score – Knowing your credit score and making sure there are no mistakes will make it easier for you to have an idea of what kind of loan you’ll get. Depending on whether your credit is excellent, good, fair or bad, you’ll get a different amount for approval and interest rate.
- Get pre-qualified for a loan – NerdWallet.com says, “Re-qualifying for a loan gives you a sneak peek at the kind of offers you may receive. Many online lenders perform a soft credit check during pre-qualification that doesn’t affect your credit score, so checking it out ahead of time is a win-win.”
- Shop around for personal loans – Shopping for lenders is key in order to find the one that best accommodates your financial needs. When shopping around, make sure to compare monthly payments and interest rates.
- Compare your offers with other credit options – Sometimes a personal loan is not the only or best option in order to move forward and get out of debt. Depending on your unique situation, make sure to evaluate all the strategies.
- Read the fine print – Before making a final decision, make sure to read the fine print in order to avoid surprises down the road.
- Final approval – Once you get approved, keep in mind that there are several factors that will determine the final amount you’ll receive.
How long does the loan disbursement usually take?
After sending an application, finding out whether you were approved for a loan should take anywhere between 24 hours to a week. Once you know that you have been approved, and for how much, it is your responsibility to fully understand the terms of the loan, what your interest rate and minimum monthly payments are, the estimated repayment period and any other terms you might be agreeing to. Once you have accepted these terms and are aware of all the implications, you’ll sign all the necessary paperwork and provide documentation in order to move forward with the loan.
Depending on your agreement, you’ll either receive a check from the bank personally or by mail or the funds will be deposited into your bank account within a week or so. Once you receive the full amount, make sure to verify that it is what you agreed on.
What happens if I don’t receive the amount I expected?
According to Bank Bazaar, there are multiple factors that could affect the actual amount you receive.“The actual amount of loan disbursed may differ from the amount sanctioned as per the agreement. The sanction letter is only an intimation from the lender that you are eligible for a particular loan, subject to certain conditions. However, the disbursal is based on additional formalities that you have to fulfill once the loan is sanctioned.”
- The amount disbursed will depend on the following factors:
- Type of loan
- Processing fee
- Upfront payments (if any)
- Service tax
What else should I know?
With personal loans, one of the best things you can do is sticking to a budget and a payment plan. Keep in mind that if you’re using the personal loan to consolidate debt and pay off your credit cards, your credit score won’t improve unless you’re making timely payments and hopefully pay off your loan even sooner than expected.
LendingPoint is a personal loan provider specializing in NearPrime consumers. Typically, NearPrime consumers are people with credit scores in the 600s. If this is you, we’d love to talk to you about how we might be able to help you meet your financial goals. We offer loans from $2,000 to $25,000, all with fixed payments and simple interest.