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Should You Apply for a Personal Loan Online or in Person?


So, you're planning to take out a personal loan to consolidate your credit card debt and pay for some much-needed home repairs. Now you have to decide whether to borrow from your local credit union or bank or apply for an online loan.

How an Online Loan Works

An online loan works a lot like a secured or unsecured loan that you'd open in person at a credit union or bank. You can apply online for a loan with a traditional financial institution or you can use an online-only lender

The biggest difference between "pure" online loans and others is that the entire transaction takes place over the internet. Generally, the process involves:

  • Submitting a prequalification request (if available) to several lenders
  • Comparing loan offers from the various lenders
  • Choosing the option with the best rates and terms
  • Filling out your official loan application
  • Uploading any additional information or paperwork the lender may need

If approved, you'll sign your loan agreement electronically and wait for the lender to deposit funds into your account. This usually takes one to five business days, though some online lenders can transfer money the same day.

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An online-only savings account could earn you more than a regular savings account.

Pros of Applying for a Personal Loan Online

If you're accustomed to ordering takeout, shopping for clothes, and paying your bills online, you may want to do the same when applying for a personal loan. The advantages of virtual lending include:


With an online personal loan, you don't have to worry about making an appointment or waiting at your local credit union or bank to meet with a loan advisor. The entire process — including the loan application, online approval, and document signing — can be done from anywhere with an internet connection using a computer, tablet, or smartphone. 

Faster Processing

The application and approval process for online personal loans may not move at the speed of light, but it's close. Technology automates many of the tasks, allowing internet lenders and credit unions and banks with an online presence to approve or deny your loan request within a few minutes or hours. If you're approved, funds can sometimes be electronically deposited into your account the same (or following) business day.

Easier Rate-Shopping

Researching and comparing personal loans is a lot easier in the digital age. Rather than calling or visiting multiple lenders, you can use websites like Credit Karma and Nerd Wallet to sort options and consider multiple offers in one place. Many credit unions and traditional banks provide similar services that enable you to check rates and eligibility specifically for their products.

If you're accustomed to ordering takeout, shopping for clothes, and paying your bills online, you may want to do the same when applying for a personal loan.

Cons of Applying for a Personal Loan Online

The at-your-fingertips convenience of online loans does have a few glitches that can't really be addressed with software updates. Generally, these include:

Less Support

It's just you and the computer when applying for a loan online, so if you encounter issues or have questions that can't be answered by a chatbot, you'll have to try connecting with a representative over the phone or via email. The same goes after you secure the loan. Depending on the lender and the amount they invest in customer support, minimal or no human interaction could lead to ongoing frustrations and a less-than-ideal overall experience.  

Information Security

Even though reputable lenders go to great lengths to protect their customers' data, identity theft is a common concern when doing business online. This is particularly true when taking out a personal loan, which requires you to provide such personal information as:

  • Name
  • Address
  • Date of birth
  • Proof of identity, such as a driver's license
  • Social Security number
  • Annual income
  • Proof of income, such as bank statements or pay stubs
  • Verification of employment
  • Bank account information

Since you'll be sharing this information over the internet, you should take precautions throughout the process to protect your data and ensure it doesn't fall into the hands of fraudsters. 

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Learn how to spot predatory lending practices before you go looking for a lender.

Can Online Loans Be Trusted?

The web can be a prime spot for loan scams and predatory lending. There are plenty of trustworthy online lenders and great rates to be found, but if a deal seems too good to be true, it probably is. Look out for these red flags:

  • You receive "approval" for a loan without applying
  • The lender isn't licensed in your state
  • The lender asks you to pay a fee before you can be approved
  • A company guarantees a loan with no proof that you can repay it

The Better Business Bureau posts regular scam updates and hosts a free tracker service you can use to search and report illegal schemes and fraud.

Pros of Applying for a Loan Online Cons of Applying for a Loan Online
Can be done anywhere with internet access using a computer, tablet, or smartphone No face-to-face interaction and less customer service and support
Faster application and approval process Possible information security issues
Easier to shop rates and terms Potential for scams and predatory lending

Pros of Applying for a Personal Loan in Person

If you're a bit more traditional and prefer doing business with a person instead of a computer screen, consider applying in person. Benefits include:

Personalized Service

Taking out a loan is a big commitment that can sometimes be intimidating, especially if you've never done it before. When you apply in person, a loan officer will help you review options and select a loan product that best meets your needs and financial situation. They'll also answer any questions you might have throughout the process and can provide additional support the entire time you have the loan. 

Negotiation Ability

When dealing with a credit union or bank in person — especially if you have a long-standing relationship and multiple accounts with the institution — you may be able to negotiate a lower interest rate. In some cases, that personal connection might also help you qualify for a loan with a lower credit score than if you were applying online.


There's something comforting about borrowing money from a credit union or bank that has a branch several blocks from where you live. This physical presence, combined with the lender's reputation for treating customers fairly and a history of investing in your community, create a level of trust you won't find online. It's tough to put a price tag on that type of value. 

There's something comforting about borrowing money from a credit union or bank that has a branch several blocks from where you live.

Cons of Applying for a Personal Loan in Person

Not surprisingly, there are a few trade-offs for the more personalized service you'll receive when you handle your loan application face-to-face. They include:

Slower Processes

Intentional or not, applying for a loan in person simply takes longer than it does online. You'll spend time waiting in the lobby, chit-chatting with the loan officer, digging through your files for a specific document, and printing and signing pages of paperwork. Then, the lender has to review your loan request, examine your credit report, and make a decision, all of which can take a day or two to a week or more depending on the size of the loan and your creditworthiness.

Higher Rates and Fees

Building and staffing branches with experienced loan officers requires a significant investment of time and resources. Some financial institutions may try to recoup a portion of these expenses by charging higher personal loan interest rates and tacking on additional loan fees. This can increase your monthly payments and result in you shelling out considerably more in interest over the life of the loan.

When time is of the essence, applying for an online loan may be the route to take.

Less Convenience

While it can be comforting to sit across the desk from the person who'll process your loan request, it's certainly less convenient than doing everything online. Applying in person requires you to make an appointment to visit a credit union or bank branch, which means you'll have to adjust your schedule to fit its hours of operation and the availability of the loan officer.

You'll also be responsible for gathering and organizing all your paperwork and going back and forth with the lender if you're missing any documents or supporting files. This could lead to multiple trips to and from the branch and all the inconveniences that come with that. 

Pros of Applying for a Loan Online Cons of Applying for a Loan Online
Personalized service throughout the application process and beyond Often takes longer to be approved and receive funds
May be able to use your relationship with the lender to negotiate rates Fees may be added to help cover operating costs and other expenses
Trust in knowing the lender is invested in your community and you as a customer Requires an appointment and a trip to a local credit union or bank branch

What to Consider Before You Apply

Before filling out your online loan application or sitting down with a loan officer, there are a few things to consider about personal loans. You should also bear in mind:

How Fast You Need the Money

When time is of the essence, applying for an online loan may be the route to take. If nothing else, you can bypass the hassle of trying to work your schedule around the loan officer's.

Whether You Have Questions to Ask the Lender

If you think you'll need some handholding throughout the loan application process and beyond, an in-person loan is the way to go. You may pay a little more in fees or interest, but the personalized service might be worth the added cost.

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Whether You Feel Comfortable Applying Online

From a security standpoint, applying for an online loan is as safe as performing most any other type of financial transaction over the internet. You can find additional comfort by choosing a reputable lender and remaining vigilant about protecting your personal information.

Are Online Loans Cheaper than In-Person Loans?

Yes and no. While online loans might offer better rates in a general sense, you might be able to negotiate to that same rate in person (whereas you can't really negotiate with a machine).

Which loan is cheapest may come down to how much your time is worth. If you aren't very familiar with doing business online or using computers, it may take you longer to apply online than in person. But if you know you can fly through an online loan application while doing two other things in the background, online might cost you less time (ie. money).

The Takeaway

Taking out a personal loan is a big commitment, so it's important to search for one with an attractive interest rate, minimal (or no) fees, and customer support before, during, and after you apply.

Whether you find it online or in person, your goal should be the same: choosing an option that meets your financial needs and puts your mind at ease. That way you can borrow with confidence, knowing that your personal loan is just that: personal.

Learn More About Personal Loan Options at PenFed

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