Applying for a loan online vs in person: Which is better?

Choosing between online and in-person loans—what you need to know before you apply

Girl using laptop and phone at home vs a man talking to a woman in office

Choosing whether to apply for a loan online or in person can significantly impact your borrowing experience. Online loans are known for their rapid processing, offering quick approvals and funding on the same or next day. This makes them an appealing choice for those needing urgent financial support.

On the other hand, in-person loans provide a more personalized service with enhanced security measures, making them ideal for individuals with complex financial situations or those who prefer direct human interaction.

This article explores the key differences between online and in-person loan applications to help you decide which is best suited to your needs.

Applying for a loan online vs in person

OnlineIn Person
Speed of approvalWithin 24 hoursA few days
Speed of fundingSame day or next dayA few days
Documents requiredZero to minimal thanks to instant bank verification (IBV)T4, bank statements, proof of identity and address
Customer serviceLess personalMore personal
SecurityMore chance to encounter a scamLess chance to encounter a scam

Speed of approval

Online

Applying for a loan online typically offers the advantage of speed, especially with lenders that have automated underwriting systems. These systems allow for almost instant decisions on loan applications to speed up the approval process.

Magical Credit, for example, offers installment loans of up to $20,000 with decisions in less than 24 hours. Spring Financial advertises that you can get a decision for a personal loan in minutes with its online application process.

According to loan search platform Loans Canada, many online lenders leverage partially automated systems to streamline their application processes and reduce the waiting time for customers. Speed and efficiency make online loans a compelling option for those needing quick financial assistance.

In person

Applying for a loan in person involves visiting a branch, which can complicate the ability to compare different loan offers quickly. However, personal interactions with a loan officer can facilitate faster approval, particularly for applicants with complex financial situations.

In-person applications may take a few days to be approved. The actual approval times can vary based on the lender’s policies, the specifics of the loan application and the applicant’s banking history.

Speed of funding

Online

In addition to quick approvals, online lenders also have a reputation for quick funding, with some within 24 hours. For example, payday lenders like iCash and GoDay can provide funding within minutes of receiving your signed loan contract. Online personal loan lenders can provide funding within a few hours or the next day.

Interac e-Transfer and direct deposit play a key role in fast funding. E-transfers are generally faster than direct deposit, which is why many online payday lenders advertise them.

In person

The speed of funding for in-person loan applications can vary. Expect to wait a few business days for your money to show up in your bank account via direct deposit.

Documents required

Online

When applying for a loan online, the process of submitting documents is highly streamlined. Lenders require proof of a regular income, bank account and permanent address. Many online lenders use instant bank verification to verify income and identity. With this method, you log in to an encrypted portal, such as Flinks or Inverite, to give the lender view-only access to your bank statements. This digital approach not only speeds up the verification process, but it also lets applicants provide all necessary information from the comfort of their homes.

In person

Applying for a loan in person often involves more documents than applying for a loan online. These can include proof of regular income, proof of ID, proof of residence, employment letter, most recent T4 and latest Notice of Assessment. You will need to bring original copies or certified copies directly to the loan officer.

This method allows the lender to verify the authenticity of the documents on the spot, which can help address any hurdles immediately. While this process might take longer than online submissions, it offers the benefit of personalized assistance and the opportunity for a more thorough application process.

Customer service

Online

Online loan platforms excel in providing round-the-clock customer support through chatbots that can instantly answer common questions and customer service hotlines that offer personal assistance at any time. Many online lenders also feature self-service portals where borrowers can view their loan status, make payments, adjust payment schedules and access important loan documents without needing direct human interaction. These digital tools not only enhance the convenience of managing a loan, but they also allow customers to handle most aspects of their loan maintenance on their own.

In person

In contrast, in-person customer service provides its own advantages, particularly through personalized advice and the ability to address unique issues directly with knowledgeable staff. Additionally, regular visits to a bank can help build strong relationships between customers and bank staff, enhancing the overall service experience. These relationships can be beneficial for future financial needs, as well-known customers may receive more attentive service and potentially quicker problem resolution based on their history with the bank. This level of personalized service is something that purely online interactions often cannot match.

Security

Online

Security is a paramount concern for online loan platforms, which employ robust encryption and data protection measures to safeguard personal information. These technologies ensure that all data transmitted between the borrower and the lender is protected against unauthorized access. Despite these precautions, the risk of online lending scams persists. That said, it’s crucial for users to verify the legitimacy of a lender before submitting personal information and to use only secure networks when applying for loans online.

In person

When you apply for a loan at a bank or credit union branch, your sensitive documents are securely managed through a combination of physical and digital measures. The in-person process includes direct identity verification by a loan officer, which can significantly reduce the risk of fraud. This face-to-face interaction ensures that your identity and personal information are correctly linked and safeguarded.

Bottom line

Choosing between online and in-person loan applications depends on your unique needs. Online loans offer speed and convenience, with fast approvals and funding, plus the ability to manage loans digitally. This makes them ideal for urgent financial needs. In contrast, in-person loans provide personalized service and enhanced security, beneficial for those with complex financial situations or who prefer direct interactions. Ultimately, the choice should align with personal preferences to ensure dealings with reputable lenders and clear understanding of loan terms.

Frequently asked questions

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To make sure you get accurate and helpful information, this guide has been edited by Leanne Escobal as part of our fact-checking process.
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Written by

Writer

Gabriel Vito is a freelance personal finance writer for Finder. With over four years of experience, he has crafted helpful guides and articles covering various personal finance topics, including credit cards, investing and banking. Gabriel's work has been featured on Yahoo Finance, NASDAQ, GoBankingRates, and more. He has a Bachelor's Degree in English and is passionate about helping others navigate their financial journey. See full bio

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