Banks offer personal loans through branches, online portals, and phone applications
Most traditional banks — Chase, Bank of America, Wells Fargo, Citibank, and regional institutions — offer personal loans to customers who meet their credit and income requirements. You can walk into a branch, call their loan department, or complete an application on their website. Banks typically require a credit check, proof of income (usually recent pay stubs or tax returns), and a bank account with them, though some will lend to non-customers. Loan amounts usually range from $1,000 to $50,000, and approval timelines run from a few days to two weeks.
The main advantage of a bank loan is that rates are often lower if you have good credit and an existing relationship with the bank. The main disadvantage is that banks have stricter credit score requirements than other lenders — many want a score of 620 or higher, and the best rates go to borrowers with scores above 700. If your credit is below 620, a bank may decline you outright.
Key Takeaways
- Traditional banks require higher credit scores (usually 620 or above) but often offer lower interest rates to borrowers with good credit history.
- Credit unions typically have more flexible credit requirements and lower rates than online lenders, but you must be a member to borrow.
- Online lenders approve borrowers with lower credit scores and fund loans faster, but charge higher interest rates and fees than banks.
- You will need to provide proof of income, a government ID, and bank account information no matter which type of lender you choose.
- Comparing offers from at least three different lenders before accepting a loan can save you hundreds of dollars in interest.
Credit unions often have lower rates and more flexible credit requirements
Credit unions are member-owned financial institutions that typically offer personal loans with lower interest rates and more flexible credit policies than banks. You must be a member to borrow, which usually means living or working in a specific area, belonging to a certain employer, or being a family member of an existing member. Some credit unions have opened membership to anyone, so it is worth checking whether you can join one in your area.
Credit unions often approve borrowers with credit scores in the 580–620 range, whereas banks rarely do. Interest rates are usually 2 to 4 percentage points lower than online lenders charge for the same credit profile. The trade-off is that credit unions typically lend smaller amounts — often $500 to $25,000 — and approval can take one to two weeks because they process applications more slowly than online platforms.
To find credit unions you may be able to join, search the CO-OP Network or Alliant Credit Union's directory online. Many employers also sponsor credit unions; check your HR department or employee benefits portal.
Online lenders approve faster and with lower credit score requirements
Online lenders — including LendingClub, Upstart, OppFi, MoneyLion, and dozens of others — approve personal loans in one to three business days and will lend to borrowers with credit scores as low as 300. They use alternative data (payment history on utilities, rent, or phone bills) alongside credit scores to make decisions, which means you have a better chance of approval even if your credit report is thin or damaged.
The cost of this speed and flexibility is higher interest rates. Online lenders typically charge 10 to 36 percent annual interest, compared to 6 to 18 percent at banks and 5 to 15 percent at credit unions. Many also charge origination fees (1 to 8 percent of the loan amount) and prepayment penalties. Loan amounts range from $500 to $50,000 depending on the lender.
Online lenders are the fastest option if you need money within days, but read the full terms before accepting an offer. Some lenders advertise a low starting rate but only offer it to borrowers with excellent credit; most applicants receive higher rates.
What documents and information you will need to provide
All lenders — banks, credit unions, and online platforms — require the same basic information: your Social Security number, date of birth, current address, and employment status. You will also need to provide proof of income, which is usually a recent pay stub (most recent two weeks), a tax return from the past year, or a bank statement showing regular deposits.
Banks and credit unions typically ask for a government-issued ID (driver's license or passport) and may request bank statements to verify your account history. Online lenders usually verify income and identity electronically and do not require you to mail documents unless they flag your application for manual review.
If you are self-employed or have irregular income, gather your last two years of tax returns and recent bank statements showing your income deposits. Some lenders will not work with self-employed borrowers; others require more documentation but will still consider you.
How interest rates and fees differ across lender types
| Lender Type | Typical Interest Rate Range | Typical Origination Fee | Credit Score Requirement | Approval Timeline |
|---|---|---|---|---|
| Traditional Bank | 6–18% | 0–2% | 620+ | 3–14 days |
| Credit Union | 5–15% | 0–1% | 580+ | 5–14 days |
| Online Lender | 10–36% | 1–8% | 300+ | 1–3 days |
The interest rate you receive depends on your credit score, income, debt-to-income ratio, and employment history. Even within the same lender, two borrowers with different credit profiles will receive different rates. Always ask for the Annual Percentage Rate (APR), which includes both interest and fees, so you can compare true costs across lenders.
Some lenders charge prepayment penalties if you pay off the loan early; others do not. Ask about this before you accept an offer, because paying off a loan early can save you thousands in interest — but only if there is no penalty.
Steps to compare offers from multiple lenders
Contact at least three lenders and request a loan offer. Most will give you a preliminary offer based on a soft credit check, which does not affect your credit score. Write down the loan amount, APR, monthly payment, origination fee, and total amount you will pay back over the life of the loan.
Calculate the total cost by multiplying the monthly payment by the number of months, then subtracting the original loan amount. For example, a $10,000 loan at 12 percent APR over five years costs about $12,700 total — meaning you pay $2,700 in interest and fees. A $10,000 loan at 8 percent APR over the same period costs about $12,100 total. That $600 difference is why comparing matters.
Once you have narrowed your choices to one or two lenders, you can move forward with a formal application. This will include a hard credit check, which temporarily lowers your credit score by a few points. Multiple hard checks within 14 days usually count as a single inquiry, so do your shopping within a two-week window.
Frequently Asked Questions
Can I get a personal loan if I have bad credit?
Yes. Online lenders approve borrowers with credit scores as low as 300, and credit unions often work with scores in the 580–620 range. You will pay higher interest rates than borrowers with good credit, but you have options. Banks are the most restrictive and rarely approve scores below 620.
What is the difference between a bank personal loan and a credit card?
A personal loan gives you a fixed amount upfront, a fixed monthly payment, and a set payoff date. A credit card is a revolving line of credit where you can borrow, repay, and borrow again. Personal loans usually have lower interest rates but less flexibility. Credit cards are faster to access but more expensive if you carry a balance.
Do I have to use my bank if I already have a checking account there?
No. You can borrow from any bank, credit union, or online lender regardless of where you bank. Shopping around for the best rate is normal and expected. Having an account at a bank may get you a slightly better rate, but the difference is usually small — do not let convenience override a significantly better offer elsewhere.
How long does it take to get money after I am approved?
Banks and credit unions typically deposit funds within three to five business days after approval. Online lenders often deposit within one to two business days. Some online lenders offer same-day funding, but this is rare and usually comes with higher fees. Ask the lender for their specific timeline before you apply.
What happens if I cannot afford the monthly payment?
Contact your lender immediately and ask about hardship options. Many lenders offer payment deferrals, extended terms, or temporary payment reductions. Missing a payment damages your credit and triggers late fees, so reaching out before you miss is important. Do not ignore the debt — lenders are often more flexible if you communicate early.