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 different types of loans. (Credible)

Dear Credible Money Coach,

How long does it take to complete a loan from start to finish? -Mary Ann

Hello Mary Ann. Thank you for your question! The time it takes to get a loan varies depending on the type of loan, your financial situation, and even underwriting requirements that are beyond your control.

Let’s see how these factors might affect the length of the loan process, from applying to getting the money.

Deadlines 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 a lot of that difference in time has to do with risk and paperwork.

Mortgages and refinances

Since mortgages are large loans, they represent a significant risk for lenders. They have to complete a long and expensive foreclosure process if you default. They could lose hundreds of thousands of dollars if a mortgage is not paid off as agreed.

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

Personal loans

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

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

Student loans

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

However, obtaining your student loan funds may take longer as they are usually only disbursed a week or two before the semester. And lenders typically send funds directly to your school for private and federal student loans.

Car loans

If you apply for dealer financing when you buy a car, the approval process is usually reduced to a few hours. If you go through a bank or credit union to get pre-approved before buying a car, it can take a few days to get the funds.

Short term loan

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

With a payday loan, you may have to pay it back on your next payday. Otherwise, your balance can be turned into a new loan with additional fees, which becomes even more difficult to repay. Therefore, be extremely careful and only use a short-term loan when you have nowhere to turn.

Your credit and finances

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

  • Pay off the debt. Having relatively low debt balances lowers your rate of credit utilization, which increases your credit score.
  • Pay your bills on time. Having a good payment history is the most critical factor in maintaining a great credit score.
  • Monitor your debt-to-income ratio (DTI). Most mortgage lenders have strict DTI limits that you must meet for approval.
  • Prepare your documents. Before applying for a loan, find out what is required, such as a W-2, bank statements, and tax returns. Having your paperwork ready will save you time.

One last word

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

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Need Credible® advice for a money-related question? Email our credible financial coaches at [email protected]. A Money Coach could answer your question in a future column.

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About the Author: Laura Adams is a personal finance and small business expert, award-winning author and host of silver girl, a weekly audio podcast and top notch blog. She is 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 work as a speaker, spokesperson and advocate. She earned an MBA from the University of Florida and lives in Vero Beach, Florida. Follow her on LauraDAdams.com, instagram, Facebook, Twitterand LinkedIn.