If you’re new to the experience of borrowing, getting a loan can be a daunting concept. But it doesn’t have to be for long. Keep reading to learn what to expect when you ask for financial assistance. Regardless of your loan or lender, the borrowing experience can be broken up into three main steps.

1. The Research Stage

Long before you get some fast cash in your hands, you should take a look at your options. Researching loans and lenders is an important step in finding something that works for your situation. Without this step, you won’t even know what kinds of personal loans are available, let alone how they work or how much they cost. 

In the financial world, research is often called comparison shopping. Because that’s what you’re doing — shopping around from lender to lender and comparing their products.

Think about it this way, if you’re in the market for a new smartphone, you wouldn’t go with the first and only cell carrier you find; that’s a sure way to pay more than you need for a new device. Most savvy cell phone owners compare financing and plans from a few other carriers to ensure they aren’t overpaying. 

The same logic applies to your hunt for an online loan. You want to compare lenders to find the most favourable terms. 

This is the stage where you find the answers to these important questions: what are the rates and terms, when do you have to repay your loan, and — more importantly — what are the requirements to qualify? After all, you may not qualify for every loan you come across. Finding this out now rather than halfway through an application will save you a lot of time and heartache. 

2. The Application and Approval Process

Once you have a good idea of the cost of borrowing and that you likely qualify for what you want, it’s time to request fast cash from a lender. This usually involves filling out a quick and concise application that sheds light on your financial situation. You may also have to consent to a credit check performed by the lender. 

This information allows a financial institution to determine your creditworthiness—or the likelihood you’ll repay them on time. A good credit score, consistent employment, and regular paychecks improve your chances of being approved, but they may not be essential. 

Once you hit submit, you should learn if you qualify relatively quickly. Approval may take longer to complete as the lender completes their underwriting process. Fintech services that automate this step may be able to deliver news faster. In some cases, they can approve you and disperse your loan by the next business day. 

3. The Repayment Period

Repayment kicks in after a predetermined time after you receive your funds. For installment loans, you might be expected to pay back what you owe after a few weeks of your approval. You’ll pay back your outstanding balance over several payments over time. 

For lines of credit, you’ll receive a statement a month after your first draw. You can make a minimum payment to avoid late fines or pay it all off at once—it’s up to you. Just know that by carrying over a balance you have less credit available to use in the next billing statement. 

Sit down with your budget to ensure you hit every payment outlined in your schedule to avoid late fines, added interest, and credit damage.

And there you have it — a basic outline of what to expect when you’re borrowing.