Where to find personal loans

Personal loans come from four main sources: traditional banks, credit unions, online lenders, and finance companies. Each type has different requirements, interest rates, and approval timelines. A traditional bank might take two weeks to decide and charge 6 to 36 percent interest depending on your credit score. A credit union often moves faster and charges less, but you have to be a member. Online lenders can approve you in days but may charge higher rates. Finance companies will lend to people with poor credit but charge the most.

The lender you choose matters because it changes what you pay back. A $10,000 loan at 8 percent costs less than half what the same loan costs at 25 percent. Where you borrow also determines what documents you need, how long approval takes, and whether a co-signer helps or hurts your chances.

Key Takeaways

  • Banks, credit unions, online lenders, and finance companies all offer personal loans, each with different interest rates and approval speeds.
  • Your credit score is the single biggest factor in whether you get approved and what interest rate you receive.
  • Credit unions typically offer lower rates than banks and online lenders, but you must be a member to borrow.
  • Online lenders approve faster than banks but often charge higher interest rates, especially if your credit is below average.
  • Finance companies will lend to people with poor credit or no credit history, but their rates are the highest of all four types.

Traditional banks and what they require

Banks like Chase, Bank of America, Wells Fargo, and regional banks offer personal loans to customers with established credit. Most require a credit score of 620 or higher, though some want 700 or better for their lowest rates. You will need to provide proof of income (a recent pay stub or tax return), a government ID, and proof of address. The bank will pull your credit report and check your debt-to-income ratio — how much you already owe compared to what you earn each month.

Bank approval typically takes 5 to 14 days. Interest rates range from 6 to 36 percent depending on your credit score and the loan term you choose. Banks usually lend between $1,000 and $100,000. If you already have a checking or savings account at the bank, approval may be faster because they already have some of your financial information on file.

Credit unions and membership requirements

Credit unions are nonprofit organizations owned by their members. They include large networks like Navy Federal Credit Union and Connexus, as well as smaller local unions tied to employers, schools, or geographic areas. Credit unions typically offer personal loans at rates 2 to 5 percentage points lower than banks, sometimes as low as 6 to 18 percent. The catch is that you must be a member to borrow.

Membership requirements vary. Some credit unions are open to anyone who lives or works in a certain county. Others require you to work for a specific employer, belong to a particular organization, or have a family member who is already a member. Once you join (usually by opening a savings account with a small deposit), you can apply for a personal loan. Credit unions often approve loans in 3 to 7 days and may be more flexible with people who have lower credit scores or shorter credit histories.

Online lenders and fast approval

Online lenders like LendingClub, Upstart, Prosper, and SoFi operate entirely through websites and apps. They approve loans in 1 to 3 days and fund them within 1 to 5 business days. Interest rates range from 6 to 36 percent, but most online lenders charge higher rates than banks for the same credit score because they take on more risk by approving faster and lending to people with thinner credit files.

Online lenders require the same basic documents as banks — proof of income, ID, and proof of address — but they verify everything digitally. Some use alternative data like your checking account history or utility payments if you have limited credit history. Loan amounts typically range from $1,000 to $50,000. The main trade-off is speed: you get money quickly, but you usually pay more interest than you would at a bank or credit union.

Finance companies and lending to poor credit

Finance companies like Elevate, MoneyLion, and OppFi specialize in lending to people with credit scores below 620 or no credit history at all. They will lend when banks and credit unions say no. The cost is high: interest rates typically range from 18 to 36 percent, sometimes higher. Approval is fast — often same-day or next-day — and the process is simple, which appeals to people in urgent situations.

Finance companies require proof of income and a bank account but may not pull your credit report at all. Some focus on short-term loans (6 to 12 months) rather than the 3 to 7 year terms banks offer. Before borrowing from a finance company, compare the total cost against other options. A $5,000 loan at 30 percent interest costs significantly more than the same loan at 15 percent, even if the higher-rate lender approves you faster.

How credit score affects where you can borrow

Your credit score determines which lenders will consider you and what rate they will charge. A score of 750 or higher opens access to the lowest rates at banks and credit unions, typically 6 to 12 percent. A score between 650 and 749 qualifies you for bank and credit union loans at 12 to 20 percent. A score between 550 and 649 narrows your options to online lenders and some credit unions, at 18 to 30 percent. A score below 550 leaves finance companies as your main option, at 25 to 36 percent or higher.

If your credit score is low, you have two paths: borrow from a finance company now at a high rate, or wait a few months while you pay down debt and dispute errors on your credit report to raise your score. Raising your score by 50 points can lower your interest rate by 3 to 5 percentage points, which saves thousands of dollars over the life of a loan.

Comparing interest rates and total cost

Interest rate is not the only cost. You also need to know the loan term (how many months you have to repay), whether there are origination fees (charged upfront by the lender), and whether there are prepayment penalties (fees for paying off the loan early). A bank might charge 1 to 6 percent as an origination fee. Online lenders typically charge 0 to 8 percent. Credit unions often charge no origination fee. Finance companies may charge 5 to 10 percent.

To compare true cost, calculate the total amount you will pay back. A $10,000 loan at 10 percent interest over 5 years costs about $11,050 total. The same loan at 25 percent costs about $13,650 total — $2,600 more. Use a loan calculator on each lender's website to see the exact monthly payment and total cost before you commit. This step takes 10 minutes and can save you thousands.

Frequently Asked Questions

Can I get a personal loan with no credit history?

Yes, but your options are limited. Finance companies and some online lenders will lend to people with no credit score. Credit unions may also work with you if you can show income and a bank account. You will likely pay a higher interest rate than someone with established credit. A co-signer with good credit can help you get approved at a lower rate.

What is the difference between a personal loan and a payday loan?

Personal loans are typically $1,000 to $100,000, last 2 to 7 years, and charge 6 to 36 percent interest. Payday loans are usually $300 to $1,000, last 2 weeks to 1 month, and charge 300 to 400 percent interest (or more). A personal loan is almost always the better choice if you can get one. Payday loans are designed to trap borrowers in a cycle of rolling over debt.

Do I need a co-signer to get a personal loan?

Not always. Banks and credit unions may approve you without a co-signer if your credit score is 620 or higher and your income is stable. Online lenders and finance companies often approve without a co-signer. A co-signer helps if your score is lower or your income is irregular, but the co-signer becomes legally responsible for the debt if you do not pay.

How long does it take to get money after I am approved?

Banks typically fund loans in 5 to 14 days after approval. Credit unions fund in 3 to 7 days. Online lenders fund in 1 to 5 business days. Finance companies often fund same-day or next-day. The money goes directly to your bank account or, in some cases, to the creditor you are paying off (like a credit card company).

What happens if I pay off the loan early?

Most banks, credit unions, and online lenders allow early repayment with no penalty. You save money on interest by paying early. Some finance companies charge a prepayment penalty, so ask before you borrow. Check the loan agreement or call the lender to confirm their policy on early payoff.