Rick Bormin, Personal Loans Moderator
There are many pros and cons of bank loans, but the pros tend to outweigh the cons. Some of the pros of bank loans are the ability to fill out an application in person, the lack of origination fees and potentially low minimum APRs. The cons of bank loans include high credit score requirements, potentially high maximum APRs and slower approval.
The term "bank loans" in this context refers to personal loans taken out from a bank, as opposed to a credit union or an online lender. You might also see the term used to describe personal loans in general or business-specific loans, though.
Below, you can learn more about the pros and cons of getting a personal loan from a bank.
Pros of Bank Loans
- In-person applicationsMany, but not all, banks have branches where you can apply in person with a credit specialist. Banks typically offer applications online and by phone, too.
- No origination feesMost of the biggest banks that offer personal loans do not charge origination fees to process the loan. That may not be the case with smaller, local banks, though.
- Low minimum APRsBanks can offer some of the lowest APRs on the market - around 5%, at a minimum.
- Lots of fundingBanks often have more lending power than credit unions or online lenders, and you might be able to get loans of up to $100,000 from some banks.
Cons of Bank Loans
- High credit score requirementsMost major banks that offer personal loans require a credit score of at least 660 for approval, and some require a score of 700+.
- High maximum APRsThe maximum APR on a personal loan from a bank is usually 25% or lower. For comparison, maximum APRs at credit unions are usually 18% or lower.
- Slower approvalIf you want to get your loan as quickly as possible, an online lender is usually the way to go. Banks can typically fund your personal loan within 7 business days after you apply, though.
Banks can offer very good deals on personal loans, but you should also consider credit unions and online lenders when choosing the best personal loan for you. You can check out WalletHub's guide on the best place to get a personal loan for more information.
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