Is it Better to Get a Personal Loan From Your Bank? (2024)

It can be better to get a personal loan from your own bank if you’ve done a lot of business together. Having a positive and long-standing relationship with your bank may improve your odds of getting approved for a loan with competitive terms. Getting a loan from your bank might also make the account easier to manage.

Before deciding if you should get a personal loan from your bank, it’s a good idea to compare offers from other banks, credit unions and online lenders. You can see how traditional bank loans compare to personal loans from other institutions in the table below.

Popular Personal Loans Compared

Lender

Lender Type

Loan Amount

APR

Credit Score Required

USAA

Bank

$1,000 - $100,000

10.34% - 18.51%

Not disclosed

Discover

Bank

$2,500 - $40,000

7.49% - 24.99%

660

PenFed

Credit Union

$500 - $50,000

7.99% - 17.99%

650

Navy Federal Credit Union

Credit Union

$250 - $50,000

8.99% - 18%

Not disclosed

LightStream

Online lender

$5,000 - $100,000

7.49% - 25.99%

660

Best Egg

Online lender

$2,000 - $50,000

8.99% - 35.99%

640


Note: Credit score requirements are according to either the lender or multiple third-party sources.

While it can be a good idea to get a personal loan from your own bank, you should always compare your options before applying. You can get started by checking out WalletHub’s picks for the best personal loans. You can also use our free pre-qualification tool to estimate your potential rates with multiple lenders.

This answer was first published on 08/15/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

Is it Better to Get a Personal Loan From Your Bank? (2024)

FAQs

Is it better to get a loan from a lender or a bank? ›

The best option for you depends on your specific circumstances. If you lack credit history or have poor credit it may be easier to get a loan from a private lender. If you have a good credit score or an established relationship with a bank, you will likely qualify for better lending terms.

Is it good to get a personal loan from a bank? ›

As personal loans are often unsecured, there tends to be stricter credit requirements to offset the risk of giving out a loan without collateral. Higher interest rates and fees: Banks tend to charge higher interest rates and more fees compared to their credit union and online lender counterparts.

Do you have a better chance of getting a loan with your own bank? ›

It can be better to get a personal loan from your own bank if you've done a lot of business together. Having a positive and long-standing relationship with your bank may improve your odds of getting approved for a loan with competitive terms. Getting a loan from your bank might also make the account easier to manage.

What is a disadvantage of a personal loan? ›

Fees and penalties can be high

Personal loans may come with fees and penalties that can drive up the cost of borrowing. Some loans come with origination fees of 1 percent to 6 percent of the loan amount.

Where is the best place to apply for a loan? ›

Start where You Bank.

Contact your current credit union or bank and ask to speak with a loan representative. The financial institution where you currently have an account will make the application process easy and convenient, and you may benefit from low or no application fees.

Does a bank loan hurt your credit? ›

Hard inquiry on your credit: Due to the hard credit check, you will likely see a short-term drop in your credit score when you formally apply for the loan. While this may not be detrimental to your long-term credit score, it could cause some harm to your credit if you apply for multiple loans in a short time.

Which bank is best for a personal loan? ›

List of Banks Offering Best Personal Loan in India
  • HDFC Bank. Max. Loan Amt. Up to ₹40L. Rate of Interest. ...
  • Axis Bank. Max. Loan Amt. Up to ₹40L. Rate of Interest. ...
  • Kotak Mahindra Bank. Max. Loan Amt. Up to ₹10L. Rate of Interest. ...
  • IDFC First Bank. Max. Loan Amt. Up to ₹1Cr. Rate of Interest. ...
  • ICICI Bank. Max. Loan Amt. Up to ₹50L.
3 days ago

How much do banks usually give for personal loans? ›

The personal loan amount you can qualify for is typically determined by your credit score, income, debt-to-income ratio and other factors. Although loan amounts vary across lenders, the maximum amount for personal loans typically ranges from $500 to $100,000.

Which bank has the best personal loan rates? ›

Summary: Best Personal Loans From Banks
CompanyForbes Advisor RatingCurrent APR range
Discover3.57.99% to 24.99%
Wells Fargo3.57.49% to 23.24%
PNC Bank3.0Rates vary by zip code
Citibank3.010.49% to 19.49%
2 more rows

Which bank is easier to get a loan from? ›

The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates they consider people with scores below 640, so even people with bad credit may be able to qualify.

What happens if you get a loan and don't use it? ›

If it's an unsecured personal loan (meaning no collateral was involved), most lenders don't care what you do with the funds. However, a debt consolidation loan is an exception, because it was granted for a specific purpose.

Is it cheaper to get a loan through a bank? ›

The primary benefit of going directly to a bank or credit union is that you will likely receive lower interest rates. They can offer more competitive deals because you are borrowing directly from them.

What are the three most common mistakes people make when using a personal loan? ›

5 mistakes to avoid when taking out a personal loan
  • You don't do your homework. No one likes homework. ...
  • You settle for a high-interest rate. ...
  • You ignore your credit score. ...
  • You forget to make repayments on time. ...
  • You don't consider your budget.

What can you not spend a personal loan on? ›

You should avoid using a personal loan to pay for college tuition, investments, basic living expenses, vacation, discretionary purchases and gambling, as well as a down payment and the costs associated with starting a business.

Is getting a personal loan a bad idea? ›

Taking out a personal loan can make more sense than tapping credit cards or home equity in some cases – but it's not always a good idea to borrow one. There are situations where this could be a good idea, but always remember that taking out a personal loan increases your overall debt.

Is it better to use a local lender or bank? ›

You'll get more personalized service.

When you work with a large bank or online lender, you're just another number. But when you work with a local lender, they'll get to know you and your needs. They'll be invested in helping you find the right home and getting you the best loan possible.

Does a lender hurt your credit? ›

Credit checks coming from lenders are reported to the credit reporting companies as an “inquiry.” An inquiry typically has a small negative effect on your credit scores. Inquiries can be seen by other lenders when they check your credit. Inquiries tell other lenders that you are thinking of taking on new debt.

Which finance is best for a personal loan? ›

Top Personal Loans Plans in India 2024
S.No.Personal Loan PlansInterest Rates
1.HDFC Bank Personal Loan10.50% p.a. onwards
2.ICICI Bank Personal Loan10.50% p.a. onwards
3.Bajaj Finserv Personal Loan13.00% p.a. onwards
4.Fullerton India Personal Loan11.99% p.a. onwards
6 more rows
Feb 15, 2024

Is it better to finance through your own bank? ›

The primary benefit of going directly to a bank or credit union is that you will likely receive lower interest rates. They can offer more competitive deals because you are borrowing directly from them.

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