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Deciding whether to apply for a loan online or in person can be difficult, especially for borrowers who are new to the lending process. Online loans generally come with more streamlined applications and may have more accessible qualification requirements. However, applying for a loan online can be less personal than working with a loan officer at a brick-and-mortar lender.
Here’s what you need to know about applying for a loan online vs. in person:
What is an online loan?
An online loan is a loan that potential borrowers can apply for without applying through a traditional bank branch. This allows applicants to pre-qualify online with multiple lenders without being subjected to harsh loan inquiries that negatively impact your credit score.
Online loans can also come with relaxed qualification requirements, streamlined application processes, and faster approval and funding speeds. Additionally, many online lenders offer a no-fee structure that can lower the overall cost of borrowing.
When to apply for a loan online
The process of applying for a personal loan can be frustrating, but online lenders aim to make the experience easier. Because online loans are convenient, there are a number of situations where they are preferable to applying in person. Consider applying for a loan online if you:
- You would like to pre-qualify before applying. Many online lenders only allow potential borrowers to pre-qualify for a loan with a gentle credit check based on their credit history and borrowing needs. If you’re not sure how much money you qualify for or whether you qualify for a competitive interest rate, choose an online lender that offers pre-qualification.
- You have no existing relationship with a bank. Some traditional banks offer more competitive interest rates or perks to customers who already bank with the institution. Without an existing banking relationship, you can qualify for better rates through an online lender.
- Need faster access to cash. Online lenders generally offer faster approval times and funding speeds than banks and credit unions. In fact, borrowers who apply online may receive money the same day.
- Have a low credit score or no credit history at all. Many online lenders use alternative credit data, such as utility payment history, to make credit decisions. This can help less creditworthy applicants get admitted.
What is a personal loan?
A personal loan is a type of financing that requires a visit to a lender’s brick-and-mortar branch rather than applying entirely online. These loans are generally offered through traditional financial institutions such as banks and credit unions.
The in-person application process can be cumbersome and frustrating for some, but other prospective borrowers prefer the opportunity to meet with a loan officer in person. Likewise, borrowers who have an established relationship with a local bank may qualify for more competitive interest rates or pay fewer fees than with an online lender.
When to apply for a loan in person
For some, applying for a loan in person can simplify the loan process and result in lower interest rates and fees. It may be best to apply for a loan in person if you:
- You are not comfortable submitting your personal information online. Online lenders employ numerous security measures to ensure the safety of borrowers’ personal information. However, if you’re still wary of submitting things like your Social Security Number (SSN) through an online application portal, applying for a loan in person may be best.
- Do you have an existing banking relationship?. Borrowers who have already established a relationship with a local bank or other brick-and-mortar financial institution may prefer to apply in person. Not only can an existing relationship speed up the application process, but a loan officer who is familiar with your finances may be able to extend a larger loan at a better interest rate than online competitors.
- Can access lower prices or fees. Even if a borrower does not have an existing banking relationship, it may still be possible to qualify for a more competitive interest rate through a personal lender. In this case, opt for the lender that offers the lowest total cost of borrowing.
- Prefer face-to-face lending. Online loans have many advantages, but applicants cannot meet with a loan officer in person. By applying for a loan in person, prospective borrowers can provide context about their financial history, funding needs, and other pertinent details. Applying in person also makes it easier to ask questions and get real-time answers.
- Are not rushed for time. Applying for a loan in person can be more time-consuming than applying online. Brick-and-mortar lenders can also take longer to review an application, approve a borrower, and disburse loan funds. Consider a personal loan if you don’t need the faster financing speeds that are often available from online lenders.
Pros and cons of online application
Applying for a loan online is the most convenient option for many borrowers. However, it may not be the best solution — especially for applicants with an existing credit or banking relationship. Here are the pros and cons of an online loan application:
Advantages of the online application
- Many online lenders offer potential borrowers a pre-qualification process.
- Loan platforms often provide access to online loan calculators.
- The applications are leaner than traditional personal loans.
- Borrowers can benefit from faster approval times and funding speeds.
- Many online lenders charge low or no fees.
Disadvantages of online application
- The application process requires the submission of personal data online.
- Borrowers are at greater risk of online loan fraud.
- Interest rates can be higher than personal lenders.
Advantages and disadvantages of a personal application
As with online loans, applying for a loan in person has its pros and cons. Consider these pros and cons before applying for a loan at a brick-and-mortar branch:
Advantages of applying in person
- A pre-existing banking relationship can result in lower fees and more competitive rates.
- Applicants have the opportunity to develop personal relationships with loan officers.
- It may be easier to ask questions of the loan officer when completing the application.
Disadvantages of applying in person
- Pre-qualification may not be available.
- Applicants must visit a physical branch to submit the required documentation.
- Approval and funding times are often longer than online loans.
frequently asked Questions
Is it okay to apply for a loan online?
Applying for a loan online is safe for borrowers who limit their search to reputable lenders. Top online lenders use encryption to secure their websites and protect lender data. To avoid predatory lenders and scams, watch out for red flags like upfront application fees, discrepancies in terms and conditions, and promises that sound too good to be true.
Where can you get the best loan?
Where to get the best personal loans depends on the needs and creditworthiness of the borrower. In general, however, borrowers can get a personal loan from a traditional bank, credit union, or online lender.
Qualification requirements, loan amounts and terms differ from lender to lender, so potential borrowers should pre-qualify with multiple lenders to find the best option. Likewise, financial institutions offer a wide range of interest rates and fees, so it’s best to research potential lenders before making a formal application.
Is it easier to get a loan in person than online?
The chances of loan approval ultimately depend on an applicant’s creditworthiness, but many online loans have less stringent qualification requirements than those offered by traditional lenders. Online lenders also generally have slimmer applications than those that must be submitted in person.
However, applying for a loan in person can allow a borrower to leverage an existing banking relationship — or give a prospective borrower the opportunity to discuss their application in more detail with a loan officer.