Where to Get a Personal Loan
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The best place to get a personal loan depends on where you can get the best interest rate plus the loan term and features that you need. Here are three options for where to get a personal loan:
Online lenders: These lenders offer a convenient way to search and compare personal loans online.
Credit unions: Personal loans from credit unions may have lower annual percentage rates and flexible terms for their members.
Banks: Some national banks offer personal loans with competitive rates and in-person support.
» MORE: Requirements for a personal loan
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Personal loans from online lenders
Online lenders typically offer the fastest way to get a personal loan, with some loans approved and funded within a day or two. Most online lenders also let you pre-qualify and see your rate and term before you formally apply. The pre-qualification process involves a soft credit check and allows you to compare loans from multiple lenders without impacting your credit.
Some online lenders target good- or excellent-credit borrowers (those with FICO scores of 690 and above) by offering high loan amounts and low interest rates. Others cater to fair- or bad-credit borrowers (FICO scores below 690). Rates are higher, but a lender may consider other factors beyond your score, such as education or employment.
» MORE: Best bad-credit loans
Pros
Pre-qualify before committing to a loan: Most online lenders conduct a soft credit check, which allows borrowers to see rates and terms before committing to a loan.
Convenient and fast application process: Borrowers can complete the loan application online and may receive funds within a couple days of approval.
Nontraditional lending requirements: Some lenders may consider factors beyond your credit score, increasing your chances of loan approval.
Cons
Potentially higher APRs: Bad- and fair-credit borrowers may receive a high rate from an online lender, making the loan more expensive.
No in-person support: Most online lenders have customer service representatives you can call, but few have physical branches you can visit when you need help.
Personal loans from credit unions
Credit unions are good places for borrowers with fair or bad credit to get a personal loan because they may have softer requirements and lower interest rates. To apply for a loan, you must become a member first, which typically requires a small fee.
Credit unions are also a good option if you need a small personal loan — less than $1,000.
First Tech Federal and Alliant Credit Union are two credit unions that offer personal loans starting at $500 and $1,000, respectively.
Pros
Lower APRs: Federally chartered credit unions cap APRs at 18%, so borrowers with imperfect credit may receive lower rates than they would elsewhere.
Softer eligibility requirements: Many credit unions consider your history as a member during the loan application process, which can help your chances of approval.
Cons
Membership required: You have to meet membership eligibility requirements to apply for a credit union loan.
No pre-qualification: Credit unions typically don't offer pre-qualification, which limits your ability to compare loans without a hard credit check.
Personal loans from banks
You’ll likely need good credit to qualify for a personal loan from a bank. It also helps to already have an account with the bank.
Existing customers may receive benefits such as lower rates, higher loan amounts and an online loan application process. New customers may need to visit a bank branch to complete the process.
PNC and Wells Fargo are examples of large banks that offer personal loans to borrowers in all 50 states. However, not all banks offer personal loans.
Pros
In-person support: If you need to speak with someone in person about your loan, you can visit a physical branch for more personalized help.
Lower maximum APRs: If you can qualify for a bank loan, you may receive some of the lowest rates available.
Cons
A branch visit may be required: Some banks require you to complete the application process in person.
May need to be an existing customer: You may need to already have an account with a bank lender to apply for a personal loan.
on NerdWallet
Summary of pros and cons of personal loan lenders
Lender type | Pros | Cons |
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Online lenders |
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Credit unions |
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Banks |
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How to choose a lender
When shopping for a personal loan, look beyond the interest rate and monthly payment to consider the annual percentage rate. The APR includes the interest rate and any extra fees. It’s the best apples-to-apples cost comparison between two loans.
Also consider the loan term, which impacts your monthly payment. Typical terms are two to seven years; a longer loan term means lower monthly payments, but more total interest.
Finally, compare consumer-friendly features from different lenders. For example, with some debt consolidation loans, lenders will send money directly to creditors, eliminating that step for you. Other lenders may let you pick a payment due date, skip a payment or offer a grace period before charging a late fee.
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