The most common places to get a personal loan are banks, credit unions and online lenders. Altogether, they issued $21 billion in personal loans to U.S. borrowers in 2018, according to TransUnion, leaving a total of $138 billion in outstanding balances at the end of the year. Online lenders issue the largest share of personal loans, but each type of personal loan provider has advantages and disadvantages in terms of approval requirements, cost, application options and more.
Where to Get a Personal Loan:
Banks – 15 of the 20 largest banks in the U.S. offer personal loans. The list of banks with personal loans includes the likes of Wells Fargo, American Express and Citibank.
Credit Unions – The top 10 credit unions in the U.S. all offer personal loans. Some of the best credit unions for personal loans are Alliant CU, Connexus CU and NASA FCU because anyone can join.
Online Lenders – Online lenders account for more than 40% of new personal loan originations, according to Experian. Some of the best online lenders include LightStream by SunTrust Bank, SoFi and Marcus by Goldman Sachs.
Family & Friends – Borrowing from someone you know can be less expensive, but more dangerous because your relationship is on the line.
Getting a Personal Loan From a Bank: The main advantage of a bank is that it has branches, which allows you to apply in person with a credit specialist. In addition, there’s the potential to get low APRs, as low as 6% in some cases and usually no more than 25%. But banks tend to have higher credit score requirements than other lenders, typically 660+.
Getting a Personal Loan From a Credit Union: Credit unions also have branches, and they have the benefit of not being for-profit institutions. Federal credit unions are also required to keep their APRs at 18% or lower. And credit unions are more likely than banks to cater to people with bad credit.
However, credit unions have specific requirements for membership. Those that allow anyone to join usually charge a one-time donation of $5-$25.
Getting a Personal Loan From an Online Lender: Online lenders have the fastest processing times and are more often willing to work with people with bad credit than banks. However, they do not have any branches. And they have higher upper limits to their interest rates, ranging from around 6% to 36%. Some of popular online lenders include Avant, LendingClub and SoFi.
Banks, credit unions and online lenders aren’t the only places to get a personal loan, but they are the only ones you should consider most of the time. There are also predatory payday lenders and auto title companies that lend money against your next paycheck or your car. But they charge excessive interest, and you should avoid them. Similarly, you could get a loan from a pawn shop, but you can expect high costs and you risk losing your item if you can’t pay them back.
Lastly, you can borrow from family or friends. This can be the least expensive approach, depending on the circumstances, but you also risk ruining your relationship if you can’t pay the loan back.
For more information on how to find the best lender for you, check out WalletHub’s article on the best places to get a personal loan.
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