More people are using online personal loan companies and ditching the traditional bank, but is it the right choice? Banks offer perks that online lenders could lack, but personal loans online could definitely be a great decision. This comparison may help you discover which is best for your financial assistance.
Convenience
Banks are less convenient for some customers because you need to visit the location more than once; once to apply for the loan and a second time to talk through the process if approved. Sometimes, this may not be convenient for those who have busy schedules or live far from the lender.
Online lenders are much more convenient. You never have to visit in person, and you can apply for the loan from the comfort of your home. In most circumstances, the application process is also much shorter than applying at a bank.
Rates
Some may claim that a bank has a higher interest rate for personal loans because it must afford office space. However, interest rates are difficult to determine because they depend on a person’s credit worthiness and income level. According to Wells Fargo Rate Calculator, you can expect to see an interest rate between 6-8% depending on the loan amount, and term length whereas online lenders can be between 5.99% and 36.00%, like Prosper.
At first glance, a bank may look like it has a higher interest rate because online lenders often have a low advertised APR. However, most online personal loans don’t inform you that the average client doesn’t receive the lowest possible interest rate. Like with any important decision, it’s important to shop around before accepting a personal loan.
Customer Service
Banks are much easier to contact simply because you can visit the location. If there is an issue, you can drive to the bank and speak to an expert who can help you resolve the problem.
Alternatively, online lenders may be harder to contact. You always have a number you can call, but you don’t know who you’re speaking to or their level of expertise. Customer service at both locations could be great or bad, but it may be more convenient for some to talk to a person face-to-face and get immediate assistance.
Partial Loan
Banks don’t allow customers to get partial loans. Most check your credit score, income level, and other factors that influence your personal loan, and then let you know if you’re eligible. Unfortunately, a reduced creditworthiness could equate to no financial assistance.
Alternatively, some online personal loan companies offer partial loans due to a peer-to-peer lending service. The loan is funded by individual investors who are later paid off as you pay off your loan. Those who don’t qualify for a full personal loan may still receive approval for a portion of it.
Credit Score
A low credit score is what keeps many people from going to a bank. You need a high creditworthiness to be accepted at a bank, which can keep some from getting a loan. However, this can also mean that those with a high FICO score can get better, lower rates when compared to online lenders.
Unfortunately, some people don’t have a perfect FICO score. Bad credit can keep some people from getting a loan, but many personal loans online specialize in providing reasonable terms and interest on financial assistance for those with a credit score of around 600
