Banks can offer safe and secure borrowing solutions with a familiar experience.
Finding the right personal loan can leave you feeling overwhelmed by the sheer number of lenders and loan types on the market. You want a loan that offers both safety and convenience, and you want the confidence that comes with knowing you’ve got the best rate and terms you’re eligible for.
A personal loan from a bank could offer you some of the features you need — like convenience of already having a banking relationship with them. Learn about the pros and cons and how you can compare your options.
How do bank loans differ from other loans?
Bank loans don’t differ much from personal loans through other lenders. The main advantage of a bank loan with your existing bank is that you could apply through your current online dashboard and manage your accounts in one place. Banks sometimes offer perks — like fee reductions — for bundling multiple financial products.
Your bank may be able to use your checking and saving account activity to verify your income and expenses. But you’ll likely be required to provide additional documentation to confirm your eligibility.
Reviews of personal loans from top banks
What types of loans can I get from a bank?
Banks offer a wide range of loan products to meet most borrowing needs. Here are just a few of the loan products you can expect to find at a bank:
- Secured personal loan. Typically used to finance a car or other large purchase, secured loans use that new purchase as collateral. This security lessens the risk of default for the lender: If you can’t make repayments, they can simply take your newly purchased asset as payment. This decreased risk generally results in lower rates and fees, but you’re typically required to use the entire loan amount solely to finance the specified asset.
- Unsecured personal loan. Unsecured loans offer more flexibility in use than a secured loan and don’t require you to use an asset as a guarantee. These loans increased the risk of default for a bank, typically resulting in higher rates and fees. Banks also usually impose stricter eligibility criteria for an unsecured loan.
- Line of credit. With a line of credit, you are able to withdraw a set amount of funds as you need to. The main difference between a line of credit and a term loan is that you have ongoing access to a credit limit without a cutoff date. Usually, you do not pay any rates or fees on this service until you use it and the rates are only charged on the amount of money you withdraw rather than the total amount available.
- Debt consolidation loan. If you have a few separate loans or credit accounts — anything from credit card debt to a car loan — you might want to consolidate this debt into one loan. With a debt consolidation loan, you can pay off your other loans and then have just one monthly payment. The benefit is that you can better manage your payments with only one loan to worry about. You could also reduce the interest and fees you’re paying across your separate loans.
Should I get a bank personal loan? The pros and cons
Pros
- The convenience of keeping your loan and other financial products in one place.
- Could offer more advanced and flexible features over other smaller lenders.
- If you have a current banking relationship, you could expedite the approval process.
Cons
- Interest rates and fees can be higher than with other lenders.
- Strict eligibility criteria could limit people with limited credit history.
What else should I consider?
If you’re considering going with your current bank for a personal loan because it seems like the easiest way to access credit, consider comparing your options online as well. To ensure you get the best value, you can shop around to see what nonbank loans you might be eligible for and then choose a loan that best suits your needs.
Top online lenders to compare
How do I apply for a personal loan?
First, weigh your bank loan options against the online options in our comparison table above. If you’ve found an online lender you’re interested it, click Go to site for a secure transfer to that lender’s online application form.
The details you’re required to submit as part of the application process will depend on the lender you choose. However, lenders generally require personal and financial details that include your income, assets and debts.
To get a personal loan, you’ll also need to be at least 18 years old, a US citizen or permanent resident and have a good to excellent credit score. Most lenders also require you to provide proof of steady employment.
