Where Can I Get a Personal Loan?

Where Can I Get a Personal Loan? article image.

You can obtain a personal loan from three main financial institutions: banks, credit unions and online lenders. Combined, there are thousands of loans from which to choose, each with its own term length and interest rate.

Deciding which lender you should approach depends on several factors, including your creditworthiness and your preferred terms. So when you're trying to decide, get to know the key differences, as well as the pros and cons, of various personal loan lenders. Here's what you need to know about where to get a personal loan and how to get the best loan possible.

Find the best personal loans in Experian CreditMatch.

Who Offers Personal Loans?

Although personal loans all work the same basic way—you borrow a fixed amount of money, then repay it in equal monthly installments—the financial institutions that offer them differ. Each has its own way of conducting business, unique qualification standards and rate structure, and benefits and drawbacks.


Conventional banks are for-profit financial institutions, and nearly all have branches that you can visit in person. In addition to providing deposit accounts such as credit and checking accounts, banks offer a variety of loan products, and personal loans are typically among them. To obtain a personal loan from a bank, you may be able to apply in person, over the phone or online.

Because banks are large financial institutions that often have long histories, obtaining a loan through one can feel comforting. If you already have accounts at the bank, or have borrowed money from it before with different loan types, you've formed a relationship. That can make it easier to get approved, and may result in a preferable interest rate.

In general, though, banks tend to have higher interest rates and stricter eligibility standards than other lenders, so if you're a newer customer you may be at a disadvantage. And if your credit scores aren't high enough, you may be denied with little explanation or assistance.

Credit Unions

While similar to banks, credit unions are nonprofit financial institutions owned by their depositors, not by shareholders. They typically serve a specific audience, such as people in a certain city or area, profession, association or community group.

To apply for a personal loan at a credit union, you'll need to be a member or become one, which usually entails opening at least one deposit account. Credit unions typically have a physical storefront as well as an online presence, and personal loans are usually on their menu of products.

Seeking a personal loan from a credit union comes with some significant upsides. Qualification is usually more forgiving than with conventional banks, and the interest rates are sometimes better than those you can find elsewhere. If you don't qualify for a loan from your credit union of choice, the credit union may work with you so you can qualify in the future. Support, financial education and assistance are all part of the credit union model.

There aren't many downsides to getting a personal loan from a credit union. One potential problem is that you may not be able to become a member at the one that offers loans with the lowest interest rates. If that happens, you'll have to seek another credit union or source of financing.

Online Lenders

As the name suggests, online lenders operate entirely over the internet. You can't enter a branch to talk with an employee. The focus is entirely on lending money rather than providing a wide array of financial services. In addition to mortgages, car loans and debt consolidation loans, almost all online lenders offer personal loans. To start the loan process with one of these companies, you'll complete and submit an application on the lender's website.

A benefit of online lenders is that loans are their primary business. Personal loans are available to a wide variety of people, from applicants with poor credit to those with excellent credit. And if you want the money at the swiftest speed, online lenders win the race. Upon qualification, the funds may be at your disposal within minutes. It can take some banks and credit unions days or more.

However, compared with banks and credit unions, online lending companies are relatively new. Some have only been in existence for a few years, and that may give you pause. Depending on the lender, customer service can be poor or virtually nonexistent. And while online lenders may qualify you when others won't, you could pay for it in the form of a prohibitively high interest rate. You may have been turned down from a bank or credit union for good reason.

What to Consider When Choosing a Lender

There are some key factors you need to consider before deciding which lender to approach or personal loan to accept.

  • Interest rate: All personal loans come with an interest rate. High rates will elevate the cost of the loan, so to save money, you'll want to get the lowest rate possible. An interest rate will usually be expressed as an APR (annual percentage rate), which includes the interest rate as well as other fees and costs. Most financial institutions that offer personal loans will publish the going rates as a range, such as 13.99% APR to 24% APR, so visit the websites of many different lenders to compare.
  • Credit scores: Because qualification and interest rates are primarily dependent on your credit scores, you will want to know what your scores are before applying. FICO® and VantageScore® are the two most common credit scoring companies, and both produce credit scores ranging from 300 to 850. Higher numbers are predictive of lower credit risk. In general, credit scores in the mid-700s and above are considered good to excellent. Check your scores long before applying, so you can pursue the right loan for you.
  • Possible discounts: Always contact the lender about ways you can lower the interest rate; discounts may be available. For example, some banks will give you a break on the rate if you have a checking account at the bank. Many lenders will reduce the rate if you enroll in automatic payments so the money is deducted from your checking account on the same day of every month, thus guaranteeing on-time payments. Still others will reduce a high rate after your credit score improves or you have made a certain number of on-time payments.

Find the best personal loans in Experian CreditMatch.

How to Get Approved for a Personal Loan

If you get rejected for a personal loan, don't take it personally. It's the lender's business decision. In fact, you should consider a denial as a sign that you need to improve your credit scores. If the only loan you can get comes with a stratospheric interest rate, you're probably better off turning it down.

Approval for unsecured loans is largely based on your credit scores—which are calculated by taking the information found on your credit reports and inputting it into mathematical models. Therefore, the information on your credit reports is extremely important. To earn high scores, you'll need to have a history of paying your bills on time and carrying low debt compared with your credit limits. Using a variety of credit products and managing them responsibly will help, as will limiting the number of loan applications you send. Each time you apply for credit, a hard inquiry will be listed on your report, and an overabundance of them can have a negative impact on your score.

If you can wait to get your scores up, you'll be in a far better position to qualify for a low rate on a personal loan. Start sending your payments on time and drive credit card balances down. If you need to add credit history to your report, consider signing up for Experian Boost . With it, you can add your cell phone and utility payments to your credit report, so when you pay those on time, your scores will likely benefit.

Finally, keep an eye on your credit reports, and make sure they're free of errors and fraudulent activity. Get a copy of your credit report and read it thoroughly. If you spot problems, dispute them immediately so they'll be removed. When they're off your report, your scores could rise, and you'll be more apt to get a personal loan that won't break the bank.

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To submit a dispute online visit Experian's Dispute Center. If you have a current copy of your personal credit report, simply enter the report number where indicated, and follow the instructions provided. If you do not have a current personal report, Experian will provide a free copy when you submit the information requested. Additionally, you may obtain a free copy of your report once a week through April 2022 at AnnualCreditReport.