Instant Personal Loans: Access Same-Day Funds Quickly

For a traditional personal loan, it takes about two to five days to receive funds once the application is approved. There are "instant loans" that allow for same-day access to funds. However, there are potential factors that can delay the process despite "instant" promises. Lenders that offer fast processing times for personal loans include Lightstream, Rocket Loans, and SoFi.

As with any loan, it's critical to have a clear understanding of the interest rates and loan conditions.

What Is an Instant Personal Loan?

An "instant" personal loan is a personal loan in which the lender immediately makes a decision on whether to approve the loan. These lenders aim to evaluate your application and send you your funds quickly, if not always instantly.

An instant personal loan works in the same way as a standard personal loan. You can apply online or in person. The lender will perform a credit check to decide if you qualify for the loan and determine what interest rate to offer you.

If you are approved for the loan and accept it, the lender will send you a lump sum of money. You must then pay this money back, generally in equal monthly installments over a set period, which is typically a few months to several years. You'll pay interest on the loan, and sometimes fees.

How Quickly Can You Access Personal Loan Funds?

Some lenders offer fast processing times for personal loans. They include (in alphabetical order) LightStream, Rocket Loans, and SoFi.

LightStream, for example, says same-day funding is available if your application is approved, you sign the loan agreement, and you complete the verification process by 2:30 p.m. Eastern time on a banking business day and schedule funding by 3 p.m.

However, while lenders may be able to process your loan application the same day you apply, other factors may slow down your receipt of the money.

For example, lenders will often send your money via Automated Clearing House (ACH) transfer. While this is potentially quicker than a wire transfer, it's not instant. You'll have to wait for your bank to accept the transfer and give you access to the funds. In some cases, that could take a few days.

Advantages and Disadvantages of Instant Personal Loans

As with any financial product, instant personal loans have pros and cons. 

Advantages Explained

• Fast funding: Funds from your instant personal loan can often be available within a day or so of applying for the loan, which may be helpful in an emergency.
• Cheaper than credit cards: The interest rates on instant personal loans are generally much lower than those on credit cards, which will save you money in the long term.
• Convenience: You can research and apply for a personal loan online, which is more convenient than visiting a bank branch.

Disadvantages Explained

• May require good credit: Although many lenders say they can process your application within one working day, this generally applies to applicants with good credit. If you have only fair or poor credit, the lender will typically look into your application in more detail, which can slow the process, as well as lead to rejection.
• Smaller choice of lenders: Only a small number of lenders offer same-day turnaround times for loans, so your choice is limited. Fewer lenders can also mean less competition on rates and terms.

Steps to Secure an Instant Personal Loan

The process of applying for an instant personal loan is largely the same as applying for a regular personal loan.

1. Determine the amount of money needed. You can generally borrow $1,000 to $50,000, though higher amounts may be available if you have excellent credit.

2. Review your finances to ensure you can handle the monthly loan repayments. This personal loan calculator can help.

3. Compare lenders to find the best rates and terms using tools like Investopedia reviews of the best fast personal loans to compare prices and terms. 

4. Fill out the lender’s online application form with your personal information. Generally, the applications are straightforward and require personal information like your Social Security number and income, among other data.

Common Uses for Personal Loans

In 2023, Investopedia commissioned a national survey of 962 U.S. adults who had taken out a personal loan to learn how they used their loan proceeds or might use a loan in the future. Debt consolidation was the most common reason people borrowed money, followed by home improvements and other large expenditures.

Exploring Alternatives to Instant Personal Loans

If you need cash quickly, an instant personal loan is often a good option, since these loans generally have lower interest rates than alternative sources. However, if you don't want to use an instant personal loan or can't qualify, you can consider some other financing options. They include:

• Cash-advance apps: These apps, some of which promise instant or one-day funding, provide small short-term loans, typically in amounts under $500 or $1,000.
• Credit card cash advances: Many credit cards allow you to take a cash advance, using an ATM or other means. While this can be convenient in a pinch, bear in mind that cash advances often carry a higher interest rate than regular purchases, and the interest clock starts ticking right away, with no grace period.
• Payday alternative loans: Traditional payday loans, offered online and by storefront lenders, can also provide money quickly, but they typically have such high interest rates that they're outlawed in some states. Many banks and credit unions now offer similar loans but with more reasonable interest rates, called Payday Alternative Loans (PALs).

The Bottom Line

Even "same-day" loan processes can involve delays due to bank processing. Factors such as credit checks and documentation can also affect the speed of receiving funds. Lenders will often send funds with a ACH transfer, which is faster than a wire transfer. However, you will still have to wait for your bank to accept the transfer and grant you access.