Dear credible money coach,

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

Hello, Marie Anne. Thanks for your question! The time it takes to get a loan will vary depending on the type of loan, your financial situation, and even underwriting requirements that are beyond your control.

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

Deadlines for the different types of loans

The type of loan you apply for can have a significant effect on the time it takes to get funds, and much of that time difference relates to risk and paperwork.

Mortgages and refinancing

Since mortgages are large loans, they pose a significant risk to lenders. They have to go through 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 carefully screen borrowers, which can take at least 30 days to complete a loan. Depending on your financial situation and how much you want to borrow, getting a mortgage can take much longer, say 45, 60, or even 90 days.

Personal loans

Although it usually takes less time to get approved for a personal loan, the time limit 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 may deposit your funds as soon as the the same day or the next working day.

Student loans

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

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

Auto loans

If you apply for financing from a dealership when buying 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 you buy a car, it may take a few days to get the funds.

Short term loan

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

With a personal loan, you may have to pay it off on your next paycheck. Otherwise, your balance can be transferred to a new loan with additional fees, which becomes even more difficult to pay off. Therefore, be extremely careful and only use a short term loan when you have nowhere to go.

Your credit and finances

While having good credit may not process your loan application any 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 credit utilization rate, thereby increasing your credit score.
• Pay your bills on time. Having a good payment history is the most critical factor in maintaining a great credit rating.
• Watch your debt ratio (DTI). Most mortgage lenders have strict DTI limits that you must meet for approval.
• Prepare your documents. Before you apply for a loan, find out what is required, such as a W-2, bank statements, and tax returns. Preparing your papers 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 several lenders – before committing to a credit product. Rates, terms and fees can vary widely from one lender to another. They can also vary depending on the type of loan. Comparison shopping can help you get the best deal available.

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About the Author: Laura Adams is a personal and small business finance expert, award-winning author and host of money girl, a top rated weekly audio podcast and blog. She is frequently cited 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 received an MBA from the University of Florida and lives in Vero Beach, Florida. Follow her on LauraDAdams.com, Instagram, Facebook, Twitter, and LinkedIn.