Personal bank loan: is a bank the best place to get a personal loan?


The personal bank loan: how it has changed

There was a time when your bank would have been the obvious choice for any type of loan. And the personal bank loan was pretty much the only personal loan you would consider getting.

Back in the day, your bank branch manager used his personal knowledge of you (it was almost always a male then), as well as his skills and judgment, to decide how much you could borrow and at what interest rate. The terms of your personal loan were based on this personal relationship.

Very few bank managers these days have this discretion. Instead, the details of your loan application will be fed into the bank’s computer and the bank will make a decision. And your decades of loyalty as a customer will likely count for little or nothing.

Check my eligibility for a personal loan up to $ 100k * (22 Sep 2021)

* TheMortgageReports and / or our partners are currently unable to service the following states: MA, NV

Personal loan vs personal bank loan

So, unless you are borrowing from a friend, relative, or employer, a computer will decide if and how much you can borrow. And how much you’re going to pay in fees and interest, too. Equally important, whoever owns that computer, they will primarily base their decision on your same limited personal information.

All of this means that the chances of getting better terms from your bank than another lender are about the same as the chances of getting better terms from another lender than your bank. Certainly, some banks offer privileges to existing customers. But, in order to compete, many online lenders offer similar or different privileges.

None of this means you shouldn’t apply for a personal bank loan at your branch or online. By all means, do it. But you should also get quotes from other lenders so you can compare what’s on offer and choose the package that’s best for you. Obviously, this is usually the one that charges you the least.

Check my eligibility for a personal loan up to $ 100k * (22 Sep 2021)

* TheMortgageReports and / or our partners are currently unable to service the following states: MA, NV

Lenders and credit scores

The approval of your application and the quality of the offer that will be made to you will depend very much on your credit score. FICO, the company behind the most widely used rating technology, divides its rating ranges into categories:

  • 800+ – exceptional
  • 740-799 – very good
  • 670-739 – good
  • 580-669 – fair
  • 579 and less – poor

Different lenders tend to specialize in more or less creditworthy borrowers. For example, most big banks like their borrowers to have a good, very good, or exceptional score.

Unfortunately, no one is likely to be able to help you if the issues that caused your score to drop persist today. And, almost whatever your borrowing source is, you’re pretty much rewarded for a high score with an inexpensive loan, but penalized for a low score with an expensive loan.

Credit unions

However, credit unions can be more sympathetic to those with troubled credit histories. Of course, you can have a hard time getting approved by anyone if you have a disastrously low score. But you have a better chance with a credit union than a bank if your score is fair or at the high end of poor.

Credit unions only lend to their members. And many limit membership to those in certain groups. So, to join a particular one, you may need to:

  • Living in a particular neighborhood
  • Be a member of a particular club or association
  • Attend a particular church or denomination
  • Be (or have been) a member of the armed forces
  • Be in a particular union
  • To have or to have had a particular profession

The criteria for membership vary enormously. But you won’t get a loan until you join. And even then, you may not qualify as a borrower until you have been a member of the credit union for a specified period of time. The rules vary from union to union as to the duration.

Online lenders

There are many lenders online. And each tends to specialize in different types of borrowers.

Some will therefore only affect those who have exceptional or very good credit. Others are more satisfied with an average (good / fair) creditworthiness. And still others focus on those with past issues that mean their score is right or wrong.

But how do you know who specializes in which category of borrower? This is where price comparison websites (yes, like this one) come in. We match the details you provide with the lenders specializing in borrowers like you. You will usually get multiple offers. And then you choose the one that suits you best.

Check my eligibility for a personal loan up to $ 100k * (22 Sep 2021)

* TheMortgageReports and / or our partners are currently unable to service the following states: MA, NV

Other sources

Once you’ve exhausted the main sources of banks, credit unions, and online lenders, you end up with peripheral sources.

Employers

Some employers are willing to give loans to employees. You will likely need to have been with the business for a minimum period of time. And he will judge that the chances of your leaving during the term of the loan are low. If he is deducting the payments from your paychecks, he might not care much about your credit score. And you could get a low interest rate.

Relationships and Friends

The upside is that your friend or relationship is unlikely to do a credit check. You can also get a very low (or zero) interest rate. The downside is that you’re putting a cherished relationship on the line if you can’t pay the loan back on time.

Payday loans

Personal loans are long term loans and payday loans are short term loans. Moreover, personal loans have affordable rates unlike payday loans.

You would have to be really desperate to take out a payday loan instead of a personal loan. Don’t do it unless you really have no choice. Payday lenders have a grim record of ruining lives.

Choose your personal loan

Whether you get a personal bank loan or a loan from a credit union or an online lender, you will go through a similar application process, which is usually very straightforward. And you’ll want the same things regardless of the source: a low interest rate, low fees, and a term long enough that you can comfortably pay your monthly payments.

The problem is, you can’t tell which lender is going to give you the best deal. So never apply to just one source. Shop around to compare offers. This is the only way to know that you are getting the best plan.

Check my rate for a personal loan up to $ 100k * (Sept 22, 2021)

* TheMortgageReports and / or our partners are currently unable to service the following states: MA, NV


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