Personal loans provide some much-needed flexibility if you need to cover an unexpected expense, consolidate your debt, or finance a costly project. Unlike other types of debt, you can use a personal loan for many purposes. That said, there are a few restrictions — you can’t use loan funds as a home down payment, for example.

If you’re considering a personal loan, here’s how you can use the money, how the application process typically works, and some options if your application is denied.

A personal loan is an unsecured loan granted to a borrower based on their creditworthiness. Secured debts like auto loans or mortgages require collateral, such as your home or car. With a personal loan, your credit history, debt, and overall personal finances speak for themselves.

You can use a personal loan for pretty much anything you’d like, with some exceptions. You typically cannot use loan funds to pay for college, make a down payment on a home, gamble, or for illegal activities.

Apart from that, a personal loan can be a worthy option if you have financial obligations like an upcoming home improvement or a costly medical bill. It can also provide a lower-interest alternative to a credit card. Some borrowers may even use a personal loan to consolidate debt — if they have mounting credit card debt, for example. Consolidating high-interest debt with a personal loan could reduce your interest costs significantly.

If you’re ready to apply for a personal loan, research and compare lenders to find the best rates and terms for your situation. It’s a good idea to prequalify for personal loans if you can. Many online and brick-and-mortar lenders offer prequalification forms that give you a better idea of the rates you may be eligible for, given your credit score, income, and desired loan amount.

After prequalifying with the lenders you’re considering, compare offers and choose the lender that suits your needs the best. You’ll still need to complete a more detailed and formal application for approval, but prequalifying for a loan can help expedite the process.

Read more: What credit score do you need for a personal loan?

Once you’ve chosen a lender, it’s time to fill out a personal loan application and submit it for consideration. Gather any necessary documents ahead of time, as it’ll help make the process run smoothly. Your lender will likely ask for key information, such as:

• Your full name

• Date of birth

• Contact information

• Social Security number or a similar identification number

• Employment information

• Proof of income or recent pay stubs

• The desired loan amount and loan term

• Loan purpose (although not every lender will ask for this)

Processing times vary from lender to lender, but it can take as long as a few weeks to receive a decision regarding your application.

Having good credit, a steady income, and a low debt-to-income ratio (DTI) can improve your chances of qualifying for a personal loan.

Read more: What is a good debt-to-income ratio for a personal loan?

You should also be aware that any time you submit a new loan application, this will trigger a hard credit inquiry. Lenders will conduct a credit check to learn more about your financial history, how you’ve managed debt in the past, your current financial situation, and how capable you are of taking on a new loan.

Your lender will review your application and any supporting documents you’ve submitted to determine if you meet their standards. If you’re approved, you’ll receive your official loan agreement with your monthly payment amount, annual percentage rate (APR), repayment terms, origination fee, prepayment penalties, and more.

After carefully reviewing your loan documents, sign your agreement and await your funds. Funding times vary by lender, but typically, you can expect to receive your funds within a few business days.

If your lender rejects your application, it must tell you why, per the Equal Credit Opportunity Act. Common reasons could include a low credit score, high DTI, or insufficient income. Knowing why your application was rejected can help you determine the best course of action to improve your chances of approval in the future.

Once your lender provides insight into why it rejected your personal loan application, it’s time to address the issue. This could involve:

• Paying down existing debt if your DTI is too high

• Finding a co-signer, or a person who signs on to support your loan application, if your credit score is too low

• Boosting your income if your lender is concerned about your ability to afford monthly payments

• Taking steps to improve your credit

You could also shop around with other lenders if your DTI and income are acceptable. Just as loan rates and terms vary, borrower requirements also vary by lender.

For example, some lenders may be willing to accept a lower credit score than others. This could be helpful if you’ve had past credit struggles, but your financial situation has improved since. Ask prospective lenders what they require before you apply.

A smaller loan may be an option as well. When you borrow less, your monthly payments are smaller, and thus, more affordable. This could make you less of a lending risk. If a lender rejects your initial application, consider asking them if a smaller loan is an option. Alternatively, you can apply for a smaller loan with a different lender.

Sometimes the best solution is addressing the root cause of the loan denial and applying again in the future. This will give you time to improve your financial situation, and it will increase your likelihood of getting approved for the loan amount you’re seeking.

This article was edited by Alicia Hahn.