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Applying for a Loan Online vs. in Person: Which Is Safer?

The Short Version

  • There are pros and cons when working with both online and in-person lenders. Deciding which is right for you will depend on your situation
  • There shouldn’t be any real difference in cost between an online loan and an in-person loan. See which one offers the best interest rates and lowest fees
  • Most online lenders are legit. They’re the new kids on the block when it comes to lending. They’re typically backed by investment banks and are regulated


You need money, and you’re thinking about taking out a personal loan. Maybe you want to consolidate your credit card debt because you’re tired of multiple credit card payments and only want to deal with a single, fixed payment. Or maybe an emergency came up and you need money quickly to cover your bills.

A personal loan can be valuable in these kinds of situations. You borrow a lump sum of money and pay it back in fixed monthly payments over 3 – 10 years. 

Now, the next question is where you should get your loan. 

Maybe your parents are telling you to see a rep at your local bank or credit union. But they’re not seeing those tempting personal loan offers in your mailbox and inbox. Those offers look good, and it’s hard to deny the appeal of conveniently applying for a loan online. But are these offers legit? And are these online lenders safe? 

To apply online or apply in person – that is the question. We’ll tell you everything you need to know about each option so you can make a decision that feels right for you.

The Difference Between Using an Online Lender and the Bank

If this is your first time filling out a loan application, it’s normal to have lots of questions and go back and forth between using an online lender or a brick-and-mortar lender. There are pros and cons when working with both online and in-person lenders. Deciding which is right for you will depend on your situation. 

To help you figure things out, let’s explore what you should expect from both.

Using a local bank or credit union

When you walk into a bank or credit union, you work with a loan officer or other representative who will ask you to fill out a loan application. That person will be your primary point of contact and will help you throughout the loan application process.

As a part of the application, you’ll probably need to provide ID, like a driver’s license or passport, and proof of income, like a recent pay stub or tax return. But that doesn’t mean that everything is going to happen on paper. Many traditional lenders offer online application forms and allow you to submit your supporting documents digitally. 

Once you’ve filled out the application, the bank or credit union will perform a credit inquiry or hard pull of your credit. 

FYI: The inquiry will show up on your credit report and may drop your score – but not by a lot and not for long.

Once you’re approved, the lender will typically deposit the funds into your checking account. The bank or credit union may require that you have a checking account with them to receive the funds, or they may offer you a lower interest rate if you open an account and use it to make your monthly payments.

Using an online lender

When you work with an online lender, everything happens online. You go to the lender’s website and follow the instructions. If all goes well, you may never speak to a single human being.

You usually fill out a prequalification form first. The form asks for basic information like your name, address and Social Security number. You may also be asked how much you’d like to borrow and how much you earn.

Based on this information, the online lender will perform a soft pull of your credit. They’ll check your credit score, but unlike a hard pull, it won’t get reported to a credit agency. 

The prequalification form is like a prescreener. It allows the lender to do a quick, informal review of your finances. Once the lender has reviewed your information, they will give you the option to fill out a more detailed application form. 

At this point, the lender will ask for more information, and you’ll be offered more specific loan options, including loan terms, interest rates and fees.

An online lender may also request documentation, including ID, like a copy of your driver’s license, and proof of income, like a recent pay stub or tax return. 

Pro tip: Make sure you know which file format(s) the lender prefers for submitting documents. 

Once you’ve provided the paperwork, the online lender will review your application and let you know what kind of loan you qualify for.

If you’re approved, the lender will transfer the funds to your checking or savings account. In some cases, the lender may even send all or part of the money directly to your credit card company or other creditors.

Data Privacy Concerns

When you submit a loan application online, you’re sharing personal financial information online. Exactly the kind of personal financial information hackers and identity thieves love to capture. 

For lots of us, a sense of security is likely one of the most appealing aspects of working with a bank or credit union. After all, they’ve got vaults and guards and insurance – so they must be safe, right?

When it comes to the protection and security of your data, you’re just as safe working with an online lender. Most legitimate online lenders use the same security technology brick-and-mortar banks use to keep your information safe from hackers and identity thieves. 

But that doesn’t mean you should relax and drop your guard. Stay safe by following these common-sense tips:

Check to see if the lender is legit

Most online lenders are legit. They’re the new kids on the block when it comes to lending. They’re typically backed by investment banks and are regulated. 

Scammers are pretty good at pretending to be legitimate lenders, so you have to get equally as good at scoping out red flags, including:

  • A lender asking for any money upfront
  • A lender not asking for ANY qualifying information about your credit
  • A lender calling, writing or asking to meet you at your home
  • An overly aggressive or demanding lender 

Those are some signs that the “lender” you’re dealing with may not be legit. If you’ve got questions about your lender, we’ve got a pro tip. 

Pro tip: Check to see if the lender is registered with the Better Business Bureau® and check with the Federal Trade Commission to see if they’re licensed in your state.

Make sure you’re using the correct site

Scammers have gotten really good at creating fake websites that look a lot like the real ones. Always make sure the URL you’re using came directly from the online lender and look for HTTPS in the web address or a padlock icon in your browser’s address bar. If you don’t see either of those, close the tab immediately.

Don’t expose your information

Banking from your local coffee shop may be convenient, but it may not be safe. Avoid using public Wi-Fi when you’re sharing personal information online. Scammers can use their computers to record your information as you type. 

Use your (hopefully) password-protected Wi-Fi at home instead. And if you are banking in public, use your mobile data plan. It may not be as fast as Wi-Fi, but it’s more secure.

What Are the Pros and Cons of Applying for a Personal Loan Online?

If you’re thinking of applying for a personal loan online. Here are some helpful pros and cons to consider.

PROS of Applying for a Personal Loan Online👍


Because everything happens online, you can apply whenever you want, and you don’t have to wait until a lender’s doors are open. All you need is a computer and an internet connection.

Avoid credit checks

Since online lenders use a prequalification to review your finances before you start the loan application process, you can get a sense of what kind of loan you might qualify for without having a hard pull show up on your credit report.

Quick comparison

Because the prequalification process with online lenders is so quick, it’s easy to shop for multiple offers. 


Because everything is done online, many online lenders can process your application in less time than a traditional lender.

CONS of Applying for a Personal Loan Online👎

Less personal attention

While the online application process may be quick, it may feel stressful if you’ve never applied for a loan before. Online lenders will provide information, but they may lack the personal touch you need to help you feel confident about your decision.

Potentially higher interest

Online lenders may offer low interest rates in their ads, but when you apply, the interest rates may be higher than you’d like. Trust us, this isn’t false advertising. The interest rate you’re offered is typically based on your credit score and income. If you don’t meet the qualifications for their lowest interest rates, you’ll pay more in interest.

What Are the Pros and Cons of Applying for a Personal Loan in Person?

If you’re thinking of applying for a personal loan at your local bank or credit union. Here are some more helpful pros and cons to consider.

PROS of Applying for a Personal Loan in Person👍

The personal touch

When you work with a bank or credit union, you usually have a single point of contact who works with you through the entire loan process. They can help make sure you’re filling out the paperwork correctly and answer any questions you have along the way.

Multiple options

Your local bank or credit union may offer personal loans, but personal loans usually aren’t a bank’s primary focus. This may work in your favor because a bank or credit union may suggest other (and possibly better) loan options like home equity loans, lines of credit or secured loans. You may even pay less in interest with one of those options.

A financial stake

While online lenders may act as middlemen for other lenders, when you borrow money from a bank or credit union, they lend you the money directly. This gives them a greater financial stake in your ability to repay the loan, which may make them more cautious if your credit history and finances don’t meet their requirements, or they believe you’re borrowing more than you should.

CONS of Applying for a Personal Loan in Person👎

Bankers’ hours

If you’re applying for a loan in person, you’ll need to show up … in person. If you can’t get to the bank when it’s open, it’ll make it harder to apply for a loan.

Slower turnaround time

Because banks operate during regular business hours, it may take them longer to process and approve your loan application. While many lenders can process applications in a week or less, if you need your money now, they may not be able to accommodate you.

That said, many banks and credit unions understand that they need to be fast to stay competitive. Today, more banks and credit unions offer the ability to apply online and get help 24/7.

Deciding Which Is Right for You: An Online Lender or in Person

Still not sure? Use our helpful side-by-side comparison to consider the differences between online and traditional lenders.

Online LendersIn-Person Banks or Credit Unions
ApplicationFully onlineMay offer a mix of online and in-person options 
QualificationsFocused primarily on your credit score and credit history May consider other factors like your history with them
RequirementsMight be more willing to help borrowers with bad credit Prefers borrowers with good credit scores and stable income 
Paper or PDFPDF or other file formatsWilling to accept paper or digital documentation
Offer Other OptionsFocused exclusively on a specific type of loanCan offer a wider range of loan products
Customer ServiceMay provide online reps, but no single point of contactWork with a dedicated loan officer during bank hours

New Technology Means You’ll Get the Lending Experience You Want

If you’re looking for a personal loan, both online and in-person lenders can help. They work differently, but each can provide you with the money you need. It boils down to which option works best for your lifestyle and your financial needs and concerns. 

So, are you #TeamConvenience or #TeamCustomerSupport?

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