Should you apply for a loan online or in person? – Forbes Advisor



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Deciding whether to apply for a loan online or in person can be difficult, especially for borrowers who are not already familiar with the borrowing process. Online loans usually come with simplified applications and may have more accessible qualification requirements. However, applying for a loan online can be less personal than working with a loan officer at a physical lender.

Here’s what you need to know about applying for a loan online or in person:

What is an online loan?

An online loan is a loan that potential borrowers can apply for without submitting an application through a traditional bank branch. This allows applicants to prequalify with multiple online lenders without being subjected to rigorous credit checks, which negatively impact your credit score.

Online loans can also come with more flexible qualification requirements, streamlined application processes, and faster approval and funding. Additionally, many online lenders offer a no-fee structure that can reduce the overall cost of borrowing.

When to apply for a loan online

The personal loan application process can be frustrating, but online lenders aim to simplify the experience. Because online loans are convenient, there are a number of situations where they may be preferable over applying in person. Consider applying for a loan online if you:

  • You want to prequalify before applying. Many online lenders allow potential borrowers to prequalify for a loan with just a soft credit check based on their credit score and borrowing needs. If you’re not sure how much you’ll qualify for or if you’ll qualify for a competitive rate, choose an online lender that offers prequalification.
  • Do not have an existing relationship with a bank. Some traditional banks offer more competitive interest rates or benefits to customers who already do business with the institution. Without an existing banking relationship, you may qualify for better rates through an online lender.
  • Need faster access to money. Online lenders generally offer faster approval times and funding speeds than banks and credit unions. In fact, borrowers who apply online can receive money the same day.
  • Have a low credit score or no credit history. Many online lenders use alternative credit data like utility payment history to make lending decisions. This can help less creditworthy applicants get approved.

What is an in-person loan?

An in-person loan is a type of financing that requires visiting a lender’s physical branch, rather than applying entirely online. These loans are usually offered by traditional financial institutions like banks and credit unions.

The in-person application process can be tedious and frustrating for some, but other potential borrowers prefer the option of meeting with a loan officer in person. Likewise, borrowers who have an established relationship with a local bank may benefit from more competitive rates or be subject to fewer fees than through an online lender.

When to apply for a loan in person

For some, applying for a loan in person can simplify the borrowing process and result in lower rates and fees. It may be best to apply for a loan in person if you:

  • You are not comfortable submitting your personal information online. Online lenders use many security measures to ensure the safety of borrowers’ personal data. However, if you’re still hesitant about submitting things like your Social Security Number (SSN) through an online application portal, it may be best to apply for a loan in person.
  • Have an existing banking relationship. Borrowers who have already established a relationship with a local bank or other physical financial institution may prefer to apply in person. Not only can an existing relationship speed up the application process, but a loan officer who knows your finances may also be able to provide a larger loan at a better rate than competitors online.
  • Can access lower rates or fees. Even if a borrower does not have an existing banking relationship, it may still be possible to qualify for a more competitive interest rate through an in-person lender. In this case, go with the lender that offers the lowest overall cost of borrowing.
  • Prefer a face-to-face lending experience. The online loan has many advantages, but it does not allow applicants to meet a loan officer in person. By applying for a loan in person, potential borrowers can provide context regarding their financial history, fund requirements, and other relevant details. The in-person app also makes it easier to ask questions and get answers in real time.
  • Are not pressed for time. Applying for a loan in person can take longer than submitting an application online. Physical lenders may also take longer to review an application, approve a borrower, and disburse loan funds. Consider an in-person loan if you don’t need the faster funding speeds often available from online lenders.

Advantages and disadvantages of applying online

Applying for a loan online is the most convenient option for many borrowers. However, this may not be the best solution, especially for applicants with an existing borrowing or banking relationship. Here are the advantages and disadvantages of an online loan application:

Benefits of applying online

  • Many online lenders offer potential borrowers a prequalification process.
  • Lending platforms often provide access to online loan calculators.
  • Applications are simpler than for traditional in-person loans.
  • Borrowers can benefit from faster approval and funding times.
  • Many online lenders charge low fees or no fees at all.

Disadvantages of applying online

  • The application process requires submitting personal information online.
  • Borrowers are more exposed to online loan scams.
  • Interest rates may be higher than those offered by lenders in person.

Advantages and disadvantages of applying in person

As with online loans, applying for a loan in person has its pros and cons. Consider these pros and cons before applying for a loan at a physical branch:

Benefits of applying in person

  • Having a pre-existing banking relationship can result in lower fees and more competitive rates.
  • Candidates have the opportunity to develop face-to-face relationships with loan officers.
  • It may be easier to ask the loan officer questions when completing the application.

Disadvantages of applying in person

  • Prequalification may not be available.
  • Applicants must visit a physical branch to submit the necessary documentation.
  • Approval and funding times are often longer than for online loans.

Frequently Asked Questions

Is it okay to apply for a loan online?

Applying for a loan online is safe for borrowers who limit their search to reputable lenders. Major online lenders use encryption to secure their websites and protect lender data. To avoid predatory lenders and scams, watch for red flags such as upfront application fees, discrepancies in terms and conditions, and promises that sound too good to be true.

Where can you get the best loan?

Where to get the best personal loans varies depending on the borrower’s needs and creditworthiness. Generally, however, borrowers can get a personal loan from a traditional bank, credit union, or online lender.

Qualification requirements, loan amounts and loan terms differ from lender to lender. Potential borrowers must therefore prequalify with several lenders to identify the best option. Likewise, financial institutions offer a wide range of interest rates and fees, so it’s best to research potential lenders before submitting a formal application.

Is it easier to get a loan in person than online?

Loan approval ratings ultimately depend on the creditworthiness of the applicant, but many online loans come with less stringent qualification requirements than those available from traditional lenders. Online lenders also typically have more streamlined applications than those that must be submitted in person.

That said, applying for a loan in person can allow a borrower to leverage an existing banking relationship or give a potential borrower the chance to discuss their application more closely with a loan officer.

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