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 generally come with more streamlined 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 brick-and-mortar lender.
Here’s what you need to know about applying for a loan online vs. in person:
What Is an Online Loan?
An online loan is one that prospective borrowers can apply for without submitting an application through a traditional bank branch. This enables applicants to prequalify with several lenders online without being subjected to hard credit inquiries, which have a negative impact on your credit score.
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When to Apply for a Loan Online
The process of applying for a personal loan 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 compared to applying in person. Consider applying for a loan online if you:
- Want to prequalify before applying. Many online lenders let prospective borrowers prequalify for a loan with only a soft credit check based on their credit score and borrowing needs. If you’re not sure how much money you’ll qualify for—or whether you’ll qualify for a competitive rate—choose an online lender that offers prequalification.
- Don’t have an existing relationship with a bank. Some traditional banks offer more competitive interest rates or perks to customers who already bank with the institution. Without an existing banking relationship, you may qualify for better rates through an online lender.
- Need faster access to cash. Online lenders generally provide faster approval times and funding speeds than banks and credit unions. In fact, borrowers who submit an application online may receive money as soon as the same day.
- Have a low credit score or no credit history at all. 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 brick-and-mortar branch, rather than applying entirely online. These loans are generally offered through traditional financial institutions like banks and credit unions.
The in-person application process can be cumbersome and frustrating for some, but other prospective borrowers prefer the opportunity to meet with a loan officer face to face. Likewise, borrowers who have an established relationship with a local bank may qualify for 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:
- Aren’t comfortable submitting your personal information online. Online lenders employ numerous security measures to ensure the safety of borrowers’ personal data. However, if you’re still wary of 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 brick-and-mortar financial institution may prefer to apply in person. Not only can an existing relationship speed up the application process, but a loan officer who is familiar with your finances may also be able to extend a larger loan at a better rate than online competitors.
- Can access lower rates or fees. Even if a borrower doesn’t 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, opt for the lender that provides the lowest overall cost of borrowing.
- Prefer a face-to-face lending experience. Online lending has many advantages, but it doesn’t let applicants meet with a loan officer face to face. By applying for a loan in person, prospective borrowers can provide context around their financial history, need for funds and other relevant details. Applying in person also makes it easier to ask questions and get answers in real-time.
- Are not rushed for time. Applying for a loan in person can be more time-consuming than submitting an application online. Brick-and-mortar lenders also may 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 through online lenders.
Pros and Cons of Applying Online
Applying for a loan online is the most convenient option for many borrowers. However, it may not be the best fit—especially for applicants with an existing borrowing or banking relationship. Here are the pros and cons of applying for a loan online:
Pros of Applying Online
- Many online lenders offer prospective borrowers a prequalification process.
- Lending platforms often provide access to online loan calculators.
- Applications are more streamlined than for traditional, in-person loans.
- Borrowers may benefit from faster approval times and funding speeds.
- Many online lenders charge low fees or no fees at all.
Cons of Applying Online
- The application process requires submitting personal information online.
- Borrowers are more at risk of online lending scams.
- Interest rates may be higher than available through in-person lenders.
Pros and Cons of Applying In Person
As with online loans, applying for a loan in person comes with advantages and disadvantages. Consider these pros and cons before applying for a loan at a brick-and-mortar branch:
Pros of Applying In Person
- Having a pre-existing banking relationship may result in lower fees and more competitive rates.
- Applicants have the opportunity to develop face-to-face relationships with loan officers.
- It may be easier to ask loan officer questions when completing the application.
Cons of Applying In Person
- Prequalification may not be available.
- Applicants must visit a physical branch to submit necessary documentation.
- Approval and funding times are often lengthier than for online loans.
