Today, personal loans don’t involve a one-on-one consultation with someone from a nearby banking branch.
As online lenders have grown in the last 15 years, getting personal loans to relieve debt or cover emergency expenses is easy.
Plenty of organizations compete to get you money, so you need to weigh your options carefully and be positive that having a loan is the right thing to do. However, it may also provide you with a better bargaining chip. The cheaper the rate is, the lower your long-term expenses will be, so it may be worthwhile to jump on the bandwagon.
Here is a list of three places to go for personal loans:
- Banking institutions
- Direct personal loans
- Web-based money lenders
We’ll walk you through the pros and cons of every location where personal loans can be taken out. Remember that your loan offer will vary depending on your situation and credit rating. We encourage you to compare offers from several institutions and read the tiny details carefully.
Personal Loan Possibilities with Banking Institutions
Traditional banks
The significant banks across America are certainly the most common lenders that pop into your head when considering getting funds. These key players often impose more stringent borrowing requirements, but you may be spared if you are a responsible customer.
Some examples: Bank of America, Chase, Wells Fargo
Personalized assistance: In most cases, major banks allow you to submit a loan application online. However, if you want to answer as many of your questions as quickly as possible, that’s the best option. Also, for those whose budget factors get complicated, it may make more sense to meet with a banker face-to-face than to try explaining things through an online request.
Existing customers benefit: Your relationship with that institution may be favourable if you have an existing account with a known bank. In theory, your credit history is limited, but one bank might be open to overlooking any deficiencies or problems if you have established yourself as a reliable customer.
May have more expensive interest rates: On the other hand, interest rates are likely higher than those obtained from a financial cooperative, an online lender or an online bank. More banks mean higher overhead costs, which translates into cost savings that are unlikely to be reflected in you.
More stringent minimum credit criteria: Larger banks are generally more rigorous in approving loans and may request a much better credit rating (670 or higher) to grant a loan. If your credit is poor or non-existent, you will likely need a co-signer or collateral if you manage to get a loan.
Community banking institutions
Community and regional banking entities are the backbones of the U.S. banking system. Quality customer care is among the key strengths of community banking institutions, which may be employee-owned.
Some examples: Heritage Bank, Texas National Bank, Valley National Bank
Customer care: In contrast to online banks or lenders, your community bank welcomes you in person for personalized service. Plus, you’ll find that the wait time is shorter than if you visit your local Chase branch or call customer care at a large bank.
Competing rates: A community bank may give you cheaper rates for a personal loan due to its smaller size and greater profitability.
Local know-how: Bankers familiar with the local business environment may respond better to requests for personal loans than foreign lenders, who may need to be made aware of a unique financial need or commercial idea.
Online financial institutions
Because of their less expensive overhead than Bank of America, you will likely come across these banks that operate solely online as willing to provide you with those savings and a more competitively priced interest rate.
Some examples: Marcus by Goldman Sachs, Ally, Discover
Potential for cheaper rates: While you might never physically meet a bank officer, the conditions for loans and deposit accounts are more advantageous with online banks. Without physical offices, online banks avoid the cost of rent, staffing and maintenance of physical offices and can provide customers with lower interest rates.
Faster application processing: Being exclusively digital providers, online banks have more fantastic tools to process your online application for a loan than other banks. Some banks can get you an answer in a few minutes after you send your application.
Personal Loan Possibilities with Credit Unions
Known for its personalized approach, the not-for-profit credit union offers its members financial products bearing interest rates lower than those of the major banks.
Some examples: Navy Federal Credit Union, Alliant Credit Union
Restricted scope: Credit unions generally offer services to specific communities, localities, industries, job sites, faith-based associations and memberships. If you wish to set up an account or take out a loan with a credit union, you must comply with their specific qualification requirements and be accepted as a member.
Greater leniency: Financial cooperatives are usually more accommodating to individuals with an average or low credit rating. Because they are non-profit, they tend to be more flexible to your situation, as profit is not their motivation. Larger banks generally have stricter criteria.
One-on-one service: While credit unions may not be the most technologically savvy, you will receive face-to-face assistance from a local expert. A narrower membership base results in a quicker turnaround time for scheduled visits.
Less technical knowledge: As small, non-profit organizations, credit unions rarely feature powerful mobile apps or online customer care, although some do.
Personal Loan Possibilities with Online Lenders
A new generation of exclusively online loan brokers has been launched to overcome market gaps. These organizations, several of whom are start-ups, feature fast application times and substandard rates.
Some examples: Avant, LendingClub, Prosper, SoFi, Upstart
Possibility of cheaper rates: Like online banks, new online loan companies should manage to give you better rates on personal loans because they have lower overhead costs.
Preliminary verification: By entering your details, like income and loan specifics, in a short application, you might get pre-qualified for a financing and view deals without committing. A soft solvency check, which won’t affect your score, will be requested by the lender.
Open to lending to individuals with poor or no credit: Some lenders may show more tolerance for financial difficulties and weak credit histories. A few companies have dedicated their entire business strategy to this clientele, which may give you an advantage.
Speed of funding: For plenty of start-ups, applying for funding is a piece of cake, a few of them providing expedited approvals and same-day financing to clients. But be sure to stay vigilant when signing.
Tips for Making an Informed Choice about Personal Loan Lenders
- Perform a credit check. Consult your current bank. In most cases, a credit scoring service is available for free.
- Comparing rates according to your credit rating. Using your credit rating, calculate the eligible loan amount and rate.
- Obtain a pre-qualification. When searching online for lenders offering personal loans, you will sometimes find a pre-qualification service that will allow you to fill out your details to get a “soft” check of your credit. This process usually shows you the loan amount you are eligible to borrow.
- Check prices. Once you are aware of the amount you are entitled to, look at the terms offered by other providers.
- Reading the small print. Review every loan’s terms and conditions before you accept it.
- Get information on the company initially. Look into the BBB (Better Business Bureau) and Google for other users’ reviews of the company.
Disclaimer : All loans and credit cards are subject to credit and underwriting approval. WiseConsumer.co is an information blog and a search platform, not a lender. WiseConsumer.co only works with advertiser partners and networks that comply with laws and regulations of New Zealand, Canada, United Kingdom, Australia, and United States. Credit cards range from $1,500 to $50,000 with Annual percentage rates (APRs) range from 13.5% to 19.9% and depend on the assessment of your credit profile. Loans range from $500 to $50,000 with terms ranging from 12 months to 60 months or more. Loans APRs range from 6.99% to 29.8% and depend on the assessment of your credit profile. For example, for a $8,500 loan paid monthly over 60 months, a person would pay $168 per month for a total of $10,080.80 over the course of the entire loan period.