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Applying for a Personal Loan Online vs In-Person

Applying for a Personal Loan Online vs In-Person
Jason Steele
Jason SteeleUpdated March 3, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you are trying to choose between applying for a personal loan online vs in person, the best option may depend on what matters most to you. If you’re looking for a quick, streamlined application process, an online loan might be right. Online loans may also be easier to qualify for and offer faster funding. But if you prefer personal service, applying for a loan in person might be better because a loan officer can answer your questions and walk you through the process.Here’s information to help you decide which option will deliver the best loan experience for you.

Applying Online for a Personal Loan

An online personal loan is also sometimes referred to as a paperless loan because you can apply for and receive a loan without submitting or signing any paper documents. Online personal loans are typically unsecured loans, so no collateral is required. Most online loans have fixed interest rates, and the rate you get typically depends on your credit. Online lenders often let you see if you prequalify for a loan by doing a soft credit check rather than a hard credit pull that may negatively affect your credit score temporarily. Online loans may be able for people without strong credit to qualify for because online lenders typically consider other factors when evaluating you for a loan.

Finding Online Lenders

Look for a reputable online lender. These lenders will check your credit as well as your ability to repay the loan, and they will provide you with information about the costs and terms of the loan. They will also protect their data so your personal information is safe.If a lender makes unrealistic promises or asks for upfront application fees, or there are discrepancies in their terms and conditions, these are red flags to indicate that the lender may not be reputable. An online lender is not necessarily a private lender. Private lenders are individuals or nondepository financial institutions that offer loans for a variety of financial products without taking deposits. Not all online loans come from private lenders.

Getting an Online Personal Loan

As mentioned, online lenders often let you prequalify to check if you would potentially be approved for an online personal loan, and what your interest rate might be. The ability to prequalify and not have it affect your credit score can be a potential draw to applying for a loan online. You can compare offers from different lenders and choose the one with the best rates and termsOnce you pick a lender, you can submit a formal loan application online. Requirements may vary by lender, but you might need to provide such information as income and employment verification. The lender will do a hard credit check, which can negatively impact your credit score temporarily. Once you are approved, you may receive the loan funds in a day or two, depending on the lender.

Applying for a Personal Loan In-Person

An in-person loan requires a visit to the lender, such as a bank or credit union to apply. The application process may be more involved and time-consuming than an online loan application. However, it does provide you with an opportunity to ask questions. And if the financial institution is one that you already have a relationship with, you may feel more comfortable there.Once the application is filled out it may take an in-person lender longer to review it. And after approval, it may take longer for the loan funds to be disbursed than with an online loan.

Finding In-Person Lenders

You can apply for an in-person loan at a bank or credit union. To find the best in-person loan for you, you should compare multiple loan offers from different lenders to choose the one that best matches your needs. 

Getting a Personal Loan In-Person

The process of applying for and getting a personal loan in-person can be lengthy. You will meet with the lender, and you may be asked to submit documents such as proof of identity, proof of employment, and proof of address.You will also need to meet the requirements for personal loans, which may vary depending on the lender. Most lenders base their decision on the applicant’s credit score, proof of income and employment, and debt-to-income ratio, which is a comparison of your monthly debt to your gross monthly income. Some personal loans also require collateral, and others may charge an origination fee. Make sure you understand about any fees involved. 

Are Online Personal Loans Safe?

Applying for a loan online is safe as long as you apply with reputable lenders. The top online lenders have security measures in place to protect your personal information. They will also provide you with information about the loan costs, rate, and terms. There are personal loan scams that you should be alert for. Unfortunately, predatory lenders can exist both online and in person, since they can be legitimate financial institutions. Always do your research before applying for a personal loan for help avoiding predatory lenders and loan sharks. Predatory lenders may take advantage of unsuspecting borrowers by using aggressive or manipulative sales tactics. Loan sharks are a type of predatory lender that lend money at extremely high interest rates and then might use coercion when borrowers cannot pay back the loan. 

Is it Better to Apply Online for a Personal Loan?

There are some circumstances where it might be better to apply for a loan online. Some online lenders let you prequalify for a loan with only a soft credit check that doesn’t have an impact on your credit score. And you may sometimes qualify for better rates through an online lender.Additionally, many online lenders also factor in other criteria during the loan approval process. If you have a low credit score, online applications may sometimes make it easier to get approved for a loan.If you need funds quickly, it may also be better to apply for a loan online. Compared to traditional banks and credit unions, online lenders tend to have faster approval and funding times and provide the loan faster as well. Conversely, you may prefer applying for a loan in person if you aren’t comfortable submitting your personal information online. Another reason to apply in person is if you have an existing relationship with the lender. This could speed up the application process and even mean a lower interest rate in some situations. Finally, applying in person can make it easier to ask questions.

Pros and Cons of Applying Online vs In-Person

There are benefits and drawbacks to both applying online and applying in-person for a loan. The advantages and disadvantages of applying online include:
Pros of Applying OnlineCons of Applying Online
Approval and funding times may be faster than applying in personNeed to be comfortable submitting personal information online
Fees may be lowerInterest rates could be higher
You can see whether you pre qualify No chance to build a relationship with the lender
The application process can be more convenient and streamlinedIt’s often difficult to ask questions during the process
Applying in-person has benefits and drawbacks as well, such as:.
Pros of Applying In PersonCons of Applying In Person
Potentially lower interest ratesThere may be no ability to prequalify
Opportunity to build a relationship with the lenderIt can be inconvenient to visit a branch in person
Easier to ask questions during the application processThe approval and funding process can take longer

Personal Loans With Lantern

Deciding whether to apply for a personal loan online or in person will depend on your individual circumstances, goals, and preferences. If you do decide to apply for a personal loan online, Lantern by SoFi can help. By filling out one simple form, you can get offers from multiple lenders in our marketplace to choose one with the best rates and terms for you. 

Frequently Asked Questions

Is it better to apply for a personal loan online?
Is it safe to get personal loans online?
What are the advantages of getting a loan online?
Photo credit: iStock/Inside Creative House

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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