Personal Loans

Getting a Loan? 3 Ways to Get a Personal Loan

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Whether you’re looking to consolidate debt, pay off medical bills or take a honeymoon, it’s important to weigh the pros and cons of getting a loan. Not all personal loans lenders are the same: Some offer lower interest rates or longer loan terms, making it crucial to shop around at banks, credit unions and online lenders. If you ultimately decide a personal loan is right for you, you’ll need to look for your best place to get a personal loan to suit your needs and financial situation.

Getting a loan: 3 personal loan lender options

3 ways to get a personal loan
Bank loans Ideal for an applicant who wants to work with a loan officer in person or to work with their current bank.
Credit union loans May be right for an applicant with a credit union membership or specific area of residence or employment affiliation that makes them eligible to work with a specific credit union.
Online loans Good for borrowers who don’t mind an online-only experience and who may want to apply outside of normal business hours.


Banks are a popular choice for obtaining a personal loan. They’re highly visible with brick-and-mortar locations and can be well-established lenders. This may be a good first choice if you already have a previously-established relationship with ya bank, as you may qualify for a relationship discount on your loan and can manage all your finances from one place.

However, not all banks offer personal loans. For example, among major U.S. Banks, Bank of America, Capital One and Chase Bank don’t. However, some of the banks that do offer personal loans include Citibank, PNC Bank and Wells Fargo Bank.

But just because you may be able to get a loan from your bank doesn’t mean you should without question. Here are some pros and cons about bank loans.


 Physical locations available to discuss financing with loan officers.

 Could already have personal information, making it easier to apply.


 Higher overhead costs than online lenders, which can translate to higher interest rates and fees for customers.

 Limited hours that may not work with borrowers’ schedules.

 May find a lengthy application process when getting a loan, as compared to online lenders.

  Credit union

Credit unions also offer in-person services, though they are different from banks in how they operate. Credit unions are nonprofit organizations that have specialized membership requirements based on factors such as geographical location or employment by specific companies, military branches, labor unions and other groups.

Among those that offer credit union loans include:

  • Alliant Credit Union
  • Navy Federal Credit Union
  • PenFed Credit Union

 Credit unions are exempt from paying taxes. Without having to pay taxes, credit unions may be able to provide lower interest rates for borrowers.

 Getting a loan can be easier for borrowers at a credit union rather than at a traditional bank.


 Must be a member of the credit union to apply and qualify for a loan.

 Credit unions usually have fewer branches than traditional banks, so it could be more difficult to work with an in-person officer.

  Online lender

Online lenders have no physical locations, which may affect your decision to work with this type of lender. Online personal loans have become increasingly popular over the years. Best Egg, LightStream and SoFi are just a few of the growing list of available online lenders.

Similar to applying for a loan with a bank or credit union, you’ll need to submit to a credit check and open an account with a lender when getting a loan. However, with the large number of online lenders out there, you could find a lender willing to work with you, even if you have bad credit.


 Can offer lower interest rates and fewer fees than traditional banks, because they don’t have to pay overhead costs of physical premises.

 You could get approved and receive funding within one business day of applying.

 May offer easier approval processes for those with lower credit scores.


 Lack of physical premises means no interactions with loan officers.

 Don’t always have the name recognition of large banks.

Getting a loan with bad credit

You may still get a personal loan with bad credit, although it’s crucial to keep in mind that those with poor credit will likely pay higher interest rates. But regardless of your credit status, we recommend steering clear of payday loans, even when you’re in a pinch. These often come from predatory institutions that charge sky-high interest rates, fees and penalties.

If you have bad credit, you still have options to get a personal loan.

  • Consider secured personal loans. These are backed by collateral, such as a vehicle or your home. With a secured loan, you agree that the lender will be able to seize your collateral if you’re unable to pay back the loan.
  • Look to online lenders that offer bad-credit loans. Depending on your credit score, you may find a reputable online lender that offers loans for people with bad credit. Do a thorough search before committing to a lender, and shop around for your best rates — though it will likely include a high APR.
  • Get a cosigner. Cosigners can help you qualify for a personal loan with a better interest rate. A cosigner with a strong credit score agrees to pay back the loan if you fail to do so, giving banks more confidence. However, it’s important to understand that your cosigner will be equally responsible for loan repayment — and if you’re unable to make payments, your credit and their credit will both suffer. Have a frank discussion about your finances and ability to repay the debt with your cosigner before entering this type of agreement.
  • Take steps to boost your credit score. If possible, wait to improve your credit score before taking on a personal loan. By paying down debts and making payments on time, you’ll be able to improve your score and possibly qualify for a personal loan with more competitive rates.

How to get a personal loan

If you’ve weighed the pros and cons and decided you’re ready to proceed, you’ll need to understand how to get approved for a loan and — ultimately — how to apply for and receive those funds. Fortunately, the process is fairly straightforward, allowing qualified applicants to receive funds quickly.

1. Check your credit report and credit score

Through April 2022, consumers can get free weekly credit reports from Equifax, Experian and TransUnion via, and you can get your credit score for free through LendingTree.

Before you approach a lender, check your credit score to gauge whether you meet the personal loan requirements for a given financial institution.

2. Shop around and compare lenders

Interest rates and fees vary by lender, making it important to shop around for the right personal loan and institution when getting a loan. Many lenders offer the ability to prequalify for a personal loan. This offers you the benefit of knowing whether you’ll be able to obtain a loan without submitting to a hard credit check, which can have a negative effect on your credit score.

Compare lenders based on interest rates, fees, length of the loan and monthly payment amounts. Use our personal loan calculator to estimate what your monthly payments, principal and interest rates may be like.

Here’s a further breakdown of some of the important things to watch.

  • Interest rate or APR: If your credit score is 720 or higher, the average APR — interest rate plus fees — for personal loans is 7.63%. To compare, if your credit score is 640 to 659, the average APR for personal loans is 26.15% (both rates are according to Q4 2019 LendingTree data). Your credit score has a significant impact on the APR you receive.
  • Loan fees: Lenders may charge a variety of fees, from origination to processing fees. Origination fees vary on average from 1% to 8%. Make sure to read the fine print so you don’t learn about any hidden fees after the fact.
  • Loan length: You’ll be expected to pay back the entirety of the loan over a fixed period of time, generally from 12 to 144 months.
  • Monthly payment: The APRs, fees and loan length will affect the monthly payments you’ll be expected to make. Be sure this payment will fit into your budget so you can pay the loan back quickly and on time.
  • Potential savings: Some financial institutions offer lower interest rates if you sign up to make automatic payments.

3. Apply for a loan

Once you’ve shopped around for a lender, it’s time to apply for a loan. Lenders tend to require similar documents and information during this process:

  • Credit score: Lenders will conduct a hard credit check when you apply. Your credit score will play a large part in determining the interest rate.
  • Proof of income: Lenders will ask for proof of income and employment, and will generally want to see a bank account in good standing. They may ask to see pay stubs and review your employment history.
  • Debt-to-income (DTI) ratio: Financial institutions will calculate your DTI to gauge whether you’ll be able to make monthly payments on your personal loan. Lenders calculate this figure by adding up your monthly recurring debts — mortgage, student loans, credit cards, etc. — and dividing that number by your gross monthly income. Lenders prefer to see a DTI of 36% or less to qualify for a personal loan.

4. Get approved and receive funding

Lenders typically review and make a decision on a loan application quickly. Some offer quick turnarounds so you can get your funds as soon as the day you’re approved — Rocket Loans, for example, offers same-day lending. Other institutions, including OneMain Financial and Fifth Third Bank, will take one business day before they’ll deposit those funds into your account.

Regardless, once you’ve been approved, it won’t be long before you receive funding and can put it to use.


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