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What Do I Need to Apply for a Personal Loan?

Written by
Brian Flaherty
Brian Flaherty is a financial writer who covers personal finance, investment analysis, and the global economy.
Read time: 7 min
Updated on March 27, 2024
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Personal loans can be a flexible, powerful source of financing to help you achieve a diverse array of goals.

Since these loans are typically unsecured and repaid through fixed monthly installments, they’re open to almost anyone with regular income and a suitable credit history.

But that doesn’t mean the application process is always straightforward. While applying for a personal loan usually isn’t too complicated, you’ll need to gather some documents in order to back up your application.

In this article, we’ll take a look at the basic documentation requirements for a personal loan application. These applications can be expansive, with some lenders asking about everything from your email address to your monthly expenses. But in most cases, you’ll need to prove just four things:

  • Identity
  • Address
  • Income
  • Banking information

Let’s start with proving the most fundamental part of your application – your identity.

Personal loan requirements for proving your identity

One of the most important requirements in completing a personal loan application is to prove you are who you say you are.

While proving your own identity might seem like a hassle, this is an essential part of protecting your finances from identity theft and fraud. Having another person take out a loan in your name can seriously impact your credit history. Lenders also need help, since such loans are unlikely to be paid back.

Proving your identity with appropriate documentation also shows lenders that you’re over the age of 18 and a US citizen, both of which are frequent requirements for accessing a personal loan in the US.

In line with the importance of proving your identity, some lenders require two separate forms of documentation, at least one of which usually has to be a photo ID. Commonly accepted documents to prove your identity include:

  • A government-issued photo ID, like a driver’s license or a passport.
  • Some forms of non-photo ID, like a Social Security card or birth certificate.
  • Other options may include a military ID or certificate of citizenship, but specifics vary by lender.

Now that the lender knows who you are, they need to know where you are. Let’s look at the different ways of proving your current address.

Personal loan documentation for proving your address

Unfortunately, lenders can’t just take your word for it when you provide your address.

One reason why is the diversity of regulations surrounding the personal loan industry, which are typically set at the state level. Since lenders want to make sure they’re not accidentally breaking the rules, they usually require borrowers to prove their current address with documentation.

In fact, some lenders don’t operate in certain states, either due to external regulatory limitations or internal compliance factors. In addition to legal requirements, lenders also need to make sure they can get in contact with you with important information about your loan. If you risk falling into default, for instance, having letters sent to the wrong address can be disastrous.

Proving your address typically isn’t too onerous, and lenders often accept at least one of the following documents:

  • If you’re renting a unit, a copy of your lease or other rental agreement.
  • If you own your house, a mortgage statement or property tax receipt.
  • A recent utility bill addressed to you.
  • Your voter registration card, if applicable.
  • Proof of insurance on your home or vehicle that includes your current address.
  • A bank or credit card statement in your name and with your mailing address listed.

Of course, personal loan applications aren’t just about information like your name and address. You’ll also need to submit a variety of financial information for a lender to determine whether to approve you for the loan – including your level of income.

How to prove your income on a personal loan application

Since personal loans are most frequently unsecured loans, they rarely involve assets serving as underlying collateral.

While this form of lending expands financing access to those who might not be asset-rich, it does mean that lenders rely almost entirely on a borrower’s income for repayment. Moreover, income is a key component of the debt-to-income ratio, a metric that lenders often use to determine whether a borrower can handle additional debt.

In line with these risk factors, lenders will often ask borrowers to both declare their current income and prove it with documentation. Depending on how you earn your income, different forms of proof may be necessary.

If you’re an employee, for instance, you might be asked to provide:

  • Your W-2 or 1099 tax forms, as applicable.
  • Pay stubs from your recent paychecks.
  • Employer contact information, since certain lenders may need to verify your continued employment.

Freelancers and self-employed individuals, however, might not have access to such documentation. Therefore, different forms of proof are often required, including:

  • Your complete tax return from the previous year.
  • Bank statements demonstrating receipt of the income you’re claiming.

Tax returns and bank statements may also be necessary to prove income from other sources, such as Social Security benefits or investment earnings. Both of these, along with other forms of earnings not associated with work, usually count as income on a personal loan application.

In fact, providing a bank statement as your proof of income can be a good idea since it helps satisfy the final major documentation requirement: proving your banking information.

Personal loan documents to prove your banking information

Some lenders, especially those that operate primarily online, require proof that you have a banking account in your name. Further, you may need to show that you earn your income through direct deposit to that bank account, which is more easily verifiable than wages paid in cash.

Since lenders frequently disburse personal loan payments electronically, rather than via physical check, they need to make sure that the account receiving the funds belongs to you. In line with this, individual personal loans usually need to be directed toward an individually owned bank account, rather than a jointly owned one (although joint personal loans do exist as well).

Verifying your banking information also ensures that the money is sent to the right place. Therefore, the form of proof you provide should include the two numbers designating your specific bank account: the routing number and the account number.

The easiest way to prove your banking information is with a bank statement. If you don’t want to fork over the amount of information contained in a full statement, some lenders may accept a verified letter from your bank indicating the account information is correct.

What else do you need to apply for a personal loan?

In this article, we covered the four main forms of proof you’ll need to supply in order to supplement your personal loan application. But a fully completed application may also require you to provide some additional information you might not be expecting:

  • Education history and highest completed degree. Some lenders factor in your education status when determining personal loan approval, which can provide insight as to your earning capacity.
  • Loan purpose. Although personal loans can usually be used for a variety of purposes, lenders do often require you to articulate what that purpose is. Before applying, make sure you consider how you plan to use the funds.
  • Monthly expenses. In certain cases, lenders may ask borrowers to provide a list of recurring monthly expenses (like rent, car insurance, and other debt payments) to help determine whether the borrower can handle additional debt.
  • Marital status. Finally, borrowers in certain states (especially community property states like Wisconsin) may need to inform lenders of their marital status to complete their application.

Ultimately, each lender has their own unique application process, meaning documentation and information requirements will vary. Remember that the personal loan process is personal – as you weigh your borrowing options, take the time to find the lender that’s right for you.

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