Applying for a loan online vs. in person — Which is best for you?

While there’s no right or wrong decision, here’s what you should know about online loans versus bank loans, and how to decide which is the right fit for you.

Nowadays, borrowers don’t have to visit a bank to secure a loan. Neobanks and other financial institutions offer digital-only banking solutions, which can include loans. You may even find some of your personal finance apps offer loans to qualified applicants.

Applying for an online loan isn’t so different from applying for a loan in person at a bank. The only exception is that you typically won’t talk to a person during the online process. 

Many lenders have entirely automated online loan applications. Borrowers upload their applications, including proof of income and other financial statements, to the lender’s portal and then wait for them to be approved or denied. 

• Applying on your own time. Online lenders are open 24/7, and no appointment is necessary. Borrowers can apply for a loan during a time that works for them. 

• Preapproval. Borrowers can get preapproved for some online loans. This process does not guarantee a loan, but it usually doesn’t impact your credit score and can be a good first step for borrowers to ballpark their eligibility and rates. 

• Faster approval and cash. Since much of the process is automated, borrowers can generally get approved for loans faster, meaning cash in your hand sooner. 

• Easier to get multiple rates. With a fast online process and no appointment necessary, it can be easier to get multiple loan offers, compare rates, and choose the right loan. 

• Uploading sensitive information online. Not all borrowers will feel comfortable uploading sensitive documents to online platforms. 

• Less assistance. The automated process means less guidance from a lending expert, which could prove challenging to first-time borrowers. However, as financial institutions address online customer service concerns, most consumers find this experience has improved. Trustpilot’s data suggests that positive reviews of U.S. money and insurance businesses have surged recently, with improved customer service causing the increase.

• Higher potential for fraud or predatory practices. It’s easier to make a business look legitimate online than it is in person. If you’re looking for an online loan fast, you might encounter predatory lenders or flat-out fraudulent sites. Always research companies and read reviews before doing business with any lender.

Deciding between applying for a loan online versus in person might come down to these factors:

• Speed. Applying for a loan online is often quicker if you need cash fast. 

• Tech preferred. Borrowers who like apps and online forms over in-person processes might prefer an online loan. 

• Experienced. If this isn’t your first loan, the lack of guidance in the online process might not be an issue.  

Online loans are safe, as long as borrowers take the right steps to protect themselves from fraud. Before applying for an online loan, check the following: 

• The bank, credit union, or online lender should be registered with your state banking regulator.

• If borrowers have complained about customer service or other concerns through online reviews, think about whether this is a deal-breaker. Look at how the lender has responded to negative reviews, and also thoughtfully consider what reviewers are complaining about. 

• Most lenders do not require a fee to apply for an online loan. If the lender requests money, it could be a red flag. 

• If a lender is willing to give you money, no questions asked, there may be a catch.  

An in-person loan requires borrowers to visit a bank or credit union or at least talk to a person. A person at the lender’s office will walk you through the application and will likely be your contact during the process. 

The process of applying for a loan in person typically starts with an appointment where you’ll meet the lender at their brick-and-mortar location. They’ll walk you through the process, helping you pull together the financial documentation you need to apply. Once approved, the lender can help you look through your options and rates to help guide the decision-making process.

• Hands-on help. If it’s your first time applying for a loan, having someone help you might make the process easier.

• An existing relationship. If you’ve been a loyal customer to the lender, there’s a chance it can positively impact your approval, rates, and even some terms of the loan.

• Everything in one place. For some, being able to access banking information and loans all in one place makes things easier. 

• Private information, offline. When you apply for a loan in person, you don’t have to upload any sensitive information online.

• Longer process. From limited banking hours to loan approval and disbursement, borrowers might find applying for a loan in person takes more time overall. 

• No preapproval. Most brick-and-mortar lenders don’t offer preapproval for loans. 

• More in-person interaction. If a borrower likes to take things at their own pace, working in person with a lender might be stressful.

An in-person loan might be the right fit for borrowers with any or all of the following criteria:

• First-time borrowers. If you’ve never applied for a loan before, you might find it helpful to have someone walk you through the process.  

• No time constraints. If you don’t need the money quickly, an in-person loan might be ideal. 

• Online safety concerns. You’re less likely to encounter scammers in person and don’t have to upload sensitive documents online.

You can start the process of applying for a personal loan over the phone, but you’ll likely either need to submit your information online or visit a lender’s branch to finish the process.

You may find rates and terms more favorable with a bank loan if:

• You’re already a loyal customer.

• You have excellent credit.

However, rates and terms may be better for an online loan versus an in-person loan if:

• You’re a credit newbie.

You shop around for rates between different online lenders.

The debate of applying for a loan online versus in person is irrelevant if a loan isn’t the right option for you right now. Always be sure you understand the repayment terms, and ensure you can make on-time payments. Both online and in-person lenders will look at the following factors to determine if a loan is the right option for you. 

The debt-to-income (DTI) ratio indicates how much of a borrower’s monthly earnings is already going toward paying debt. Generally, an ideal DTI ratio is 36%. If you already have debt in your name, it may be harder to take out another loan.

Lenders typically like to see at least a good credit score, between 690 and 719, to approve a loan. Generally, the better your credit report, the more favorable your interest rate. You can keep an eye on your credit score using personal finance apps.

Deciding between an online versus in-person loan will largely come down to personal preference regarding in-person interaction and speed.  

The ease of getting a loan online or in person has more to do with an applicant’s credit score and financial history than it does with where the loan comes from. If the borrower has a solid credit report and a low debt-to-income ratio, it won’t make much of a difference beyond personal preference.  

As long as a borrower verifies the lender’s certifications, the online loan should be trustworthy. 

If a borrower has all the paperwork they need to apply for a loan on hand, applying for a loan online is generally faster than applying for a loan in person. However, speed shouldn’t be the only motivating factor for choosing a loan. Always consider other factors and check reviews to ensure you’re working with the right company.

Trustpilot is a review platform that is open to all. The companies and profile pages referenced in this article are provided for informational purposes only and are not recommended, endorsed by, or representative of the views of Trustpilot. The Trustpilot companies linked in this post are expected to abide by Trustpilot’s Guidelines, but have not been reviewed for compliance.