Online or In-Person Loans: What’s Better?

The growth in the online personal loans industry has made it easier than ever to apply for a loan online. Gone are the days where you had to make an appearance at a physical branch in order to get a loan, since you can now submit all relevant documentation by applying for a loan online. However, an in-person loan might offer benefits that an online loan can’t, so you should explore both options rather than defaulting to the online process for its speed and ease.

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In this article

    Online personal loans vs. in-person loans

    Online loan pros • Can be done from home
    • Often processes quickly
    • Money is directly deposited
    Online loan cons • New industry has some scams
    • Some rates are higher
    • Potential information security challenges
    In-person loans pros • Good rates for long-term customers
    • More often are legitimate lenders
    • Can ask questions/personalized experience
    In-person loans cons • Often slower to get money
    • May have fees passed along
    • Inconvenience of going in-person

    Where can I get the best personal loan?

    The world of online lending is still evolving, so some of the decision between online versus in-person loans is going to come down to personal preference when you are looking for an unsecured personal loan. However, there are a few ways to consider what the best personal loan is and how to get it.

    If you are looking for fast cash, fairly internet-savvy and willing to do a little research to ensure you avoid scams, online loans may be a good path. You can quickly submit your information and compare rates, ensuring you get a competitive set of fees, interest rate and terms.

    [ More: Best Personal Loans for Fair Credit ]

    If you have a long-standing relationship with a brick-and-mortar lender, have questions about loans or don’t trust sharing your information on the internet, then an in-person loan may be better. Some lenders can offer better rates to customers with existing accounts like checking and savings, and by virtue of talking with a loan officer in-person, you can have a more personalized experience. You can also avoid the worry that you’ll choose a lender online that’s actually running a personal loan scam.

    How do I decide between an online or an in-person loan?

    While occasionally personal loans are meant to be paid off quickly, most people who apply for a personal loan are committing for many months or years. Your best bet is likely to hinge on how quickly you want the money and how long you shop around for rates. It’s not entirely clear that you’ll qualify for better interest rates online versus in-person, so comparison shopping is needed if you want to really make sure you end up paying as little as possible for your loan. If getting the money fast is more important than the cost of the loan, however, online is likely to be your better bet.

    Is the money for an emergency?

    In some circumstances, the speed with which you can get the money matters more than the rate. For instance, if you don’t have access to a credit card but are reasonably sure you’ll be able to pay off a personal loan quickly, you might focus on fast online personal loan options rather than an in-person loan that requires an appointment and other time-consuming steps.

    [ Next: Top 10 Reasons to Apply for a Personal Loan ]

    However, even in an emergency, you’ll need to weigh the costs of the loan as part of the equation, especially if this isn’t a temporary cash flow problem. If you are likely to pay back the loan for a while, you’ll want to aim for a competitive rate, even for an emergency expense.

    Do you want a cheaper loan? 

    Modern online lenders have attempted to streamline the process of offering loans, knowing that they need to compete in the existing in-person loan marketplace. As a result, online lenders may offer better rates and therefore overall cheaper loans.

    However, in-person lenders are working hard to keep up with these new tech-based lenders. Some major banks, for instance, now offer a hybrid process where you can apply for the loan online but still take advantage of visiting a branch if you have questions.

    In other cases, such as not-for-profit credit unions, an in-person loan application may yield the cheaper loan because the organization isn’t seeking to profit, but simply to recoup expenses. While many lenders use similar factors to decide which rates to offer, shopping around is a valuable option with online lenders. Just ensure that these lenders do a soft credit check each time you check rates rather than a hard one, which can impact your credit if you have too many of them.

    Do you feel comfortable sharing your personal information online? 

    A crucial factor that causes some people to opt for in-person loans is worries about online information security. For the vast majority of licensed lenders, information security is just as important to them as it is to you, so you are likely to be safe. However, you have to make a decision based on what information you are comfortable sharing online. The Federal Trade Commission recommends reading privacy policies, keeping your Social Security number safeguarded and double-checking to make sure you aren’t giving your information to imposters online.

    [ See: How to Get a Loan With Bad Credit ]

    Check Your Personal Loan Rates

    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

    Get Started

    with our trusted partners at Bankrate.com

    A separate but related concern has to do with the reputation of the online lenders you choose. You need to do background research before applying for a loan online, since there are lending scams that promise “too good to be true” loans and subsequently steal your identity. Signs of online lending scams include:

    • Insisting that you will definitely be approved for a loan — no real lender should make this claim, even if it focuses on fair or poor credit lending. It should have some kind of standard by which it approves loans.
    • There are a few ways that you can determine that a lender is less than legitimate: check if it is registered in your state, look for it on the Better Business Bureau for complaints and see if it has a physical address.
    • Lenders shouldn’t ask for money upfront from you, pressure you to act quickly or contact you before you make a loan inquiry.

    We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Laura Leavitt

    Contributing Finance Writer

    Laura Leavitt is a writer and teacher in Ohio. She has written personal finance stories for Business Insider, The Billfold, The Financial Diet, and more.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Loans Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to Interest.com, PersonalLoans.org, and elsewhere.