Should You Apply for a Loan Online vs. In Person? How to Choose
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Whether you should apply for a personal loan online or in person depends on your borrowing needs and personal preferences.
If you want a fast approval decision and the convenience of applying from home, an online application may make sense. If you favor a face-to-face experience, opt for a traditional brick-and-mortar bank or credit union.
» MORE: Best online lenders
No matter how you apply, the best lender is usually the one that offers the lowest interest rate, so it’s a good idea to compare personal loans from multiple lenders.
Applying for a loan online vs. in person: Pros and cons
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Applying in person |
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Online lender advantages and disadvantages
Advantages of applying for a loan online
Pre-qualification is widely available. Many lenders let you pre-qualify to see your potential loan amount, rate and repayment term without a hard credit check, and you can use that information to compare offers. NerdWallet recommends pre-qualifying with multiple lenders before formally applying.
Fast approval and loan disbursement. Online lenders typically process loan applications within a day, and some can fund a loan the same day you apply or the following business day.
Apply any time of day. Unlike brick-and-mortar banks, you don’t need to schedule an appointment or work around business hours to apply for a loan online.
» MORE: How to apply for a personal loan
Disadvantages of applying for a loan online
You must share personal information online. With an online loan application, you must electronically share information like your Social Security number and income. The lender may also require access to your bank account. Lenders take measures to keep your information safe, but if you don’t feel comfortable sharing sensitive information online, applying for a loan at a physical bank or credit union may be right for you.
Limited or no human interaction. You’ll only be able to contact an online lender via the phone or internet. Working with an online lender can also be challenging if you don’t have reliable internet access or aren’t technologically savvy.
May be difficult to distinguish reputable lenders from predatory ones. While many online lenders are as safe as brick-and-mortar banks, some predatory lenders lurk online. You can research common red flags to help detect personal loan scams, but if you’re not comfortable checking the reputation of the lender, applying online may not be for you.
In-person lender advantages and disadvantages
Advantages of applying for a loan in-person
Existing customers may more easily qualify or get rate discounts. You may have the opportunity to negotiate a lower rate or qualify with a lower credit score if you have a preexisting relationship at your financial institution. Some national banks offer rate discounts to qualified bank customers.
Personalized assistance applying for and managing the loan. If this is your first loan application, you may be more comfortable working directly with a loan officer to understand different terms and conditions. Applying in-person also gives you the ability to ask questions in real time rather than searching through website pages or emailing customer service representatives.
Greater peace of mind in sharing personal information. If you don’t feel comfortable sharing personal information such as your Social Security number, income and bank account information online, applying for a loan in-person may be your best option.
» MORE: Best bank loans
Disadvantages of applying for a loan in-person
More difficult to shop for the best offer. Applying for a loan in-person means potentially accepting the offer from that bank or credit union, rather than comparing offers among lenders. Visiting several financial institutions to compare will be time-consuming.
Loan disbursement may take several days or longer. Banks and credit unions can take up to a week to approve loan applications, particularly if you’re applying in person.
Can only apply during business hours. When you apply for a loan in person, you may be restricted by the bank’s hours of operation, and you may have to schedule an appointment in advance.
Many lenders with brick-and-mortar locations maintain an online presence, so it is possible to apply online with a bank or credit union and visit a nearby branch for in-person support.
Tips to distinguish between reputable lenders and scams
Loans from online lenders are as safe as loans originated from large banks, provided that the online lender is reputable.
A reputable lender checks your credit, discloses the loan’s costs and verifies your ability to repay before approving your application. The lender should also have a license to do business in your state.
The Consumer Financial Protection Bureau (CFPB) maintains a list of state bank regulators, which you can use to find out whether the lender you’re considering has a valid license.
The bottom line: Where can you get the best loan?
Regardless of whether it’s from an online lender or a bank branch, the best loan is the one with costs, terms and features that match your needs. Comparing multiple offers from lenders can help ensure you’re getting the best value for your situation.
» MORE: Where to get a personal loan
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