Advertising Disclosure

Online Vs Bank Personal Loans - Which is Better?

Christopher James


You may want to get a personal loan for many reasons. Perhaps you need money to buy a car, go on vacation, or pay medical bills. There are many reasons why people take out personal loans, but the key is that it must be paid back within a certain time frame. For the most part, whether you get money from a bank or an online lender, the application process and repayment process is pretty much the same. However, there are some key differences to consider before you choose which type of lender you will use.

Compare Top Lenders

Simple Application

Better Penny score

Compare Multiple Rates
  • APR: 5.20% - 35.99%
  • Loan Terms: 1-10 Years
  • Credit Score: Fair/Good/Excellent
  • Amounts: $600-$200,000
TrustPilot Score

Based on 6752 User Reviews

Consumer Interest

Based on the past 7 days

Products and Services

Better Penny Review Score

Online Vs Bank Personal Loan

When getting a personal loan, there are usually two key choices regarding who you get the loan from. You can either go with a bank or an online lender. It doesn't really matter what type of institution you use if you know what to expect from them.

Banks offer personal loans for a variety of reasons, but sometimes they are the best option when you have bad credit. Even if you have poor credit, banks may still offer personal loans to people with a steady income. This is because the bank sees you as an asset in their quest to make money, which means they are willing to take on more of a gamble with you since they believe their investment is worthwhile. This means that banks usually have higher interest rates. 

However, the application process for a bank is usually more labor-intensive because banks have been known to be stricter in their lending practices. In other words, it's a higher risk for the bank to give you money, so they are usually more serious about assessing your ability to properly handle the loan.

Online lenders specialize in personal loans, whether you have great or poor credit. These types of lenders are seen as more convenient to the customer because they usually offer lower rates, and the application process is usually easier. When using online lenders, you typically upload your information and apply on their website. Interest rates can vary depending on several factors, which can include your credit score and the amount you are borrowing. Even if you have a low credit score, online lenders may be more likely to give you a loan because they think you will be a worthwhile investment.

Once you have decided whether to use a bank or an online lender, you need to consider how much money you want to borrow. Banks are more likely to offer more money, and online lenders offer less money. The difference in the amount of money that is offered could be due to banks having more resources than an online lender.

Pro's of Online Personal Loans

  • Quicker and easier processing and approvals.
  • Shorter-term loans.
  • Smaller loan amounts.
  • Flexible loan requirements.
  • Online applications, no need to go to the bank.

Cons of Online Personal Loans

  • Higher Rates.
  • Less Lender Regulation.
  • Smaller Loan Amounts.

Pros of Traditional Bank Loans

  • Longer Terms.
  • Large Loan Amounts.
  • Lower APR.
  • More Lender Regulation

Cons of Traditional Bank Loans

  • Slow Approval Process.
  • Tighter Approval Rate
  • Require in-person Meeting.


The Convenience of online personal loans versus bank loans may provide more value to you, but ultimately it comes down to preference. This is a decision that can be made with some thought and consideration for your individual needs and life situation.