- Banks, credit unions, and online lenders are the top three places to go for personal loans.
- Online lenders are great for a first digital experience and benefits like mobile apps.
- If you want in-person financial assistance, you should probably choose a bank or a credit union.
- Read Insider’s list of the best personal loans here.
A personal loan can help you cover expenses such as home improvement projects, moving costs, or debt consolidation. Now you need to know where to get one.
Your three main options for a personal loan are online lenders,
, and banks. Here’s how borrowing from each institution will work.
1. Online lenders
Online lenders are known for their speed – most can get you your rates in just a few minutes, and some can even deposit your money the same day your loan is approved. Online lenders offer a digital first experience, and many offer perks like the ability to manage your personal loan from a mobile app.
If you have great credit and want the best rates you can find on a personal loan, you can’t do better than with LightStream. The lender offers APRs as low as 2.49%. Goldman Sachs’ SoFi and Marcus are also good options.
2. Credit unions
Personal loans from banks and online lenders can carry an APR of up to 30% for borrowers with poor credit, but the maximum interest rate a credit union can charge on the bank. Most loans are capped at 18% by the National Administration of Credit Unions. If your credit isn’t at its best, you might get a lower rate with a credit union than with a bank or online lender.
Many credit unions also offer lower minimum loan amounts than banks or online lenders, which could be useful if you only need a little cash to get by. For example, the Navy Federal Credit Union and the Service Credit Union offer loans as low as $ 250.
However, you will need to become a member of your preferred credit union to actually take out a loan from the institution. Our list of the best credit unions for personal loans includes easy-to-join credit unions.
You may prefer a bank over a credit union or online lender if access to branches across the country is important to you. For example, Wells Fargo, a national bank that offers personal loans, has more than 5,000 branches in 36 states and Washington, DC.
Banks, especially traditional institutions, will typically charge higher interest rates to cover overhead costs such as building space and utilities. Some banks don’t even offer small personal loans because low interest rates and low profit margins do not offset the costs of administering and managing the loan.
How to choose a personal loan lender
Before you start researching different lenders, think about what characteristics of each financial institution are most important to you:
- If you value in-person financial assistance, a bank or credit union is probably the best choice.
- If you need less money, it’s easier to get a personal loan from a credit union or online lender than from a bank.
- If you want a top-notch online experience, banks and online lenders usually have more up-to-date technology than credit unions.
- If you are looking to take out a personal loan in the same place where you keep your checking and savings accounts, a bank or credit union might be the best choice.
After you have thought about the different features that you are looking for in a lender, start shopping around for the best possible rate.
“Take advantage of flexible credit applications from a handful of different lenders to see what your rate would be before you make a decision,” Brian Walsh, CFP and senior director of financial planning at SoFi told Insider. “That way you can make sure you know you are getting the best deal.”
In addition, check the Better Business Bureau Note to make sure it is trustworthy and has no recent major scandals. The BBB assesses a company’s reliability by evaluating a company’s responses to consumer complaints, the veracity of advertising, and openness about business practices.
No matter where you choose to get a personal loan, be sure to research thoroughly and prioritize what’s important to you from a lender.