From movies to groceries, you can get almost anything you need online from the comfort of your home. But there are advantages to doing things in person. A 70-inch flatscreen still isn’t as big as the silver screen of the movie theater, and there’s quite a difference between hand-selecting your own produce and letting a personal shopper pick it for you.
So, when it comes to personal loans, which is better? Should you apply for a loan online or in person? The short answer is that it comes down to tradeoffs and preferences. In this article, we’ll explain what each method offers and the tradeoffs that come with it so that you can make the best choice for you.
Key Differences Between Applying for a Loan Online and In-Person
Obviously, there’s a difference between filling out an application digitally online and filling one out with paper and pen in an office. However, the differences between online and in-person loan applications go far beyond how you fill in your information, they affect the entire process.
Finding potential lenders
If you know you want to apply for a loan in person, you need to account for that when searching for lenders. Rather than looking up the top-rated lenders, you’ll likely begin by searching for lenders in your area. Keep in mind that by committing to an in-person experience, you’re narrowing your available pool of lenders to choose from.
Recommendations and word-of-mouth can also take on more importance when hunting for an in-person loan experience, as there may not be as many reviews available online.
Choosing a lender
Regardless of whether you wind up going with a lender you can see in person or an online lender, you should take the time to ask them questions and get to understand their product offering.
If you can visit a lender in their office, they’ll be able to address your concerns face-to-face. Some people are more comfortable with interacting this way, and you can really get a sense of a lender’s communication style and get a read on some intangibles like how much you trust them.
Online lenders will still be able to answer your questions, it will just be done via phone or through online chat. The key information conveyed will be the same. Some people prefer communicating this way and saving the time it takes to drive to and from a physical location.
Whichever you choose, make sure to compare the annual percentage rate (APR) of lenders you’re considering. This figure combines the total cost of the interest and fees a lender charges.
Typically, brick-and-mortar lenders don’t have the digital support system that online lenders do. They may require physical copies of supporting documentation and physical signatures. This can slow down the application processing time for certain types of loans.
Online lenders, by necessity, must be equipped to handle every aspect of the application online from start to finish. This can lead to faster processing times.
Applying Online vs. In-Person Pros and Cons
Here’s how the advantages and disadvantages of applying online stack up to applying in person.
Applying for a loan online
You don’t need to drive to the branch location and you don’t need to worry about what time the office closes. If you feel like submitting your application at midnight on a Saturday, you’re free to do so.
When you’re willing to apply online, you open up the potential pool of lenders to choose from, giving you more choices than just those within reasonable driving distance.
Many online lenders allow you to get prequalified online without committing to the loan or hurting your credit score. This allows you to compare offers from multiple lenders fast.
When you do submit an application with an online lender, they usually have a digital support system in place to process it quickly. If you’re approved, the funds can sometimes be released as quickly as in one business day.
You don’t get the personal touch when you apply online. There’s no handshake or getting to know the person issuing you the loan.
When you apply online, you’ll need to submit sensitive information like your social security number and financial data through online forms. While these forms are usually secure, some people feel uncomfortable doing this.
There’s a higher risk of getting scammed online versus when you’re sitting in a loan officer’s office. Make sure to verify that you’re on the correct site and that you submit your information through the appropriate forms.
Applying for a loan in-person
Many people respond well to the personal attention you get applying in person. They might also feel more comfortable asking their questions during face-to-face interactions.
If you get along well with the person who helps you, there’s the potential of working together again for potential loans in the future, like a mortgage.
If you’re a member of a bank or a credit union with a physical presence, sometimes they offer their members perks like discounted rates or breaks on the fees necessary to close the loan.
In addition to the time the appointment takes, you must also account for the time to drive to and from the lender’s office.
To apply online you have to make it to the physical location during business hours. This can be a challenge, especially if you work full-time.
It costs money to keep physical branches open. Many institutions pass some of those costs on to the consumer through additional fees.
How To Decide If Applying Online or In-Person Is Right for You
Here are some questions to ask yourself to help you gauge which option might be a better fit for your needs.
- Is personal interaction important to you? When it comes to finances, plenty of people value good eye contact and a strong handshake. If that’s the case for you, then an in-person loan application might be better for you.
- Do you need the funds fast? Online lenders typically have the edge when it comes to approval speed. If you need the funds fast for something like an emergency, an online lender might be the way to go.
- Do you keep digital records? You’ll need to submit digital records as a part of an online application. If you only have paper copies of things like your tax returns and W-2s, it may be more convenient to go into an office and avail yourself of their copy machine. (Unless you have a printer with a scanner.)
- Are you comfortable submitting sensitive information online? Many Americans have become accustomed to putting credit card information and their social security numbers into countless forms online. However, many others don’t have this experience or aren’t comfortable with it. If you’re interested in applying online, be sure you’re okay with submitting sensitive personal information through secure digital forms.
Using a legitimate online lender is safe. However, you need to be aware of scammers when applying for a loan online.
In terms of the information that is required, there is not. The lender will need to verify the same personal information like your credit score and debt-to-income (DTI) ratio to assess the strength of your application.
Your approval odds should not be affected whether you apply online or in person. However, the lender you choose can affect your chances of approval as different lenders can have different requirements to qualify for the loan.
Final Thoughts on Whether You Should Apply for a Loan Online or In-Person
It’s possible to secure a loan either by applying online or in person. There are tradeoffs and benefits that come with both, so the option that’s most appealing to you will depend on your preferences.
Remember, you’ll be paying the loan off for years after you get it. While the application process is important, don’t let the prospect of an online lender scare you off from getting a great deal, or vice versa if a brick-and-mortar lender catches your eye.
The Short Version
- The difference between online and in-person lenders affects the entire loan process, from the potential pool of lenders to choose from to the application processing time
- Pros of applying online include a bigger potential lender pool, the ability to compare prequalified offers and fast processing times
- Pros of applying in person include personal attention, the ability to build relationships and potential discounts offered to members