Applying for a Loan: Online or In Person?

Should you apply for a loan in person or online?

When to apply for an in-person loan

You have good credit. Since brick-and-mortar banks don’t often have a way for you to prequalify for loan approval, it’s best to only apply in person if you’re confident in your credit score. This way, you won’t have to worry about your eligibility.
You already have a relationship with a bank. If you have an existing bank account with a local financial institution or traditional banks, you’ll likely benefit from a quicker loan process—and you could get a better rate by working with a loan officer who knows the details of your financial situation. This option also allows you to ask any questions you may have about their loan offers and receive answers in real time.
You want to negotiate loan terms. Even if you don’t know the loan officer beforehand, meeting with one in person can help you make a better impression, which may give you some wiggle room when it comes to your loan terms. Meeting face to face allows borrowers to explain their situation and context in detail, and they’re often more likely to approve a larger loan amount or provide you with more favorable loan options.
You don’t want to put sensitive information online. While online lenders employ strict security measures to protect your personal data, you still may be hesitant to submit financial information or your Social Security number through an online portal.
You’re willing to spend more time finding the best option. Applying for a loan in person will be more time-consuming than submitting information online, which won’t be ideal if you’re in a hurry. However, if you’re willing to spend a bit more effort to score the best loan terms, in person is the way to go.

Disadvantages of applying for a loan in person

There’s often no pre-qualification process. That means you won’t be able to see loan rates or terms without the lender performing a hard credit check, which is likely to impact your credit report.
Of course, applying in person means you have to go to a physical location, which can be more time-consuming and laborious.
In-person loans can take longer to get approved and funded than online loans.

When to apply for a loan online

You want to be sure you qualify before officially applying. Unlike in-person lenders, online lenders allow potential borrowers to prequalify without a hard credit check. If you’re unsure of how much money you can qualify for or what your rates could look like, going with an online lender will provide you the option of pre-qualification. With this route, you can apply for pre-qualification with several lenders to find the best loan terms.
You have a lower credit score or little credit history. Online lenders often take more than just your credit report into account when deciding on your qualification. Payments like your utility bills could be considered, too, which could help you get approved if your credit score is less than ideal.
You need a loan quickly. This is one of the biggest advantages to online loan applications. Once you apply, you’ll know almost immediately whether you’re approved or not—and depending on the lender, you could receive your funds the very same day.
You don’t have an existing connection with other lenders. If you don’t already have a relationship with any financial institution, it can make more sense to apply online instead. Banks sometimes offer lower rates to existing customers, but without this deal, you can probably find better rates with an online lender.

Disadvantages of applying for a loan online

You’ll have to submit sensitive information online through application portals, which can sometimes be risky.
You’re at a higher risk for online lending scams. Before applying with an online lender, be sure to research the company before falling victim to scammers.
Online lenders often charge higher interest rates than in-person lenders.

Are online lenders safe?

They guarantee approval before you apply
They don’t have a physical branch/address
They pressure you to decide on the spot
They requires payment upfront
They call and offer a loan via telephone
The deal sounds too good to be true

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