Best Banks for Personal Loans
Finding the right bank for personal loans can get overwhelming since there are so many competing offers. There are also a lot of things to consider, such as fees, processing time, credit score requirements, APR, etc. This article simplifies your search by narrowing down the top five best banks and providing you the essential details to help you assess if you can qualify for a loan from at least one of them.
- APR range
- Fees
- Terms
- Amounth
- Unemployment protection
Bank 1
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 2
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 3
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
- APR range
- Fees
- Terms
- Amounth
- Unemployment protection
Bank 1
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 2
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Bank 3
- 6.95%–35.89%
- Up to 5% transfer fee
- 3–5 years
- $1,000–$40,000
- No
Table of Contents
Pros and Cons of Personal Loan Banks
Taking out a personal loan satisfies different purposes. It can help you pay for an emergency expense, acquire a high-ticket item, or even build a good credit score. But getting one is often a serious commitment, so you have to understand the pros and cons before you apply.
Here are just some of the major ones:
Pros
- No collateral. One of the best advantages of a personal loan is that it doesn’t require you to put up your assets to secure the credit. This is helpful if you don’t have many possessions that can be collateralized.
- Fixed Payments. Interest on the loan’s principal is fixed, making each monthly installment towards the repayment of your loan fixed as well.
- Low requirements. Spotless credit history isn’t required either, as even those with a poor credit score can gain approval.
- Flexible. The exact amount you can borrow and the payment terms can be adjusted according to your preference.
Cons
- Other fees. There are also additional costs aside from interest rates when acquiring a personal loan, like an “origination fee” or processing fee, ranging from 1% to 6% of the loan principal. For example, for a $50,000 loan, you could be paying a 2% origination fee or an extra $1,000.
- Higher Interest Rates. Since personal loans are unsecured and depend on the borrower’s creditworthiness for repayment, the interest rates usually are higher.
- Prepayment Penalties are incurred if you decide to settle your liability early. This is a fee that banks may hit you with because they’d miss out on your interest payments if you close your loan ahead of time.
- Attracts Scammers. Scammers may pose as a legitimate company just so they could steal your personal information, which they could then use to steal your identity.
If you have a good income and a better Credit Score, then the personal loans that banks offer are the best option for you..
Top 5 Banks for Personal Loans
In this section, you’ll find the top five banks that offer personal loans in the U.S. (Goldman Sachs, LightStream, Wells Fargo, PNC Bank, and Citibank). Each of these banks has a specific category wherein the structure of their offerings is best suited for.
Marcus by Goldman Sachs: The best in general
Overall, the best bank for personal loans is Marcus by Goldman Sachs. But it isn’t the number one option because it’s the lender that offers the highest loanable amount or the lowest rates. There are certainly other banks that are more suited in those categories. Marcus by Goldman Sachs is the best in general because it extends the most flexibility for borrowers.
One of the bank’s features that stand out among the rest is it permits borrowers to choose repayment dates. Borrowers can even modify those dates or even skip a payment.
| Pros | Cons |
|---|---|
|
Borrowers can borrow from $3,500 to $40,000 |
There are no options to pre-qualify |
|
Repayment terms range from 36 to 72 months |
No cosigner allowed |
|
APR: 6.99% - 19.99% |
Takes 1 to 4 business days to receive the money |
|
660+ Credit Score |
|
|
No late payment, prepayment and origination fees |
|
|
Pre-qualification is available |
|
Wells Fargo: Highest Loan Amount
When it comes to the highest loanable amount, two lenders offer the maximum value of $100,000: LightStream and Wells Fargo. However, Wells Fargo is far more lenient when it comes to requirements as it needs a credit score of only 600 to qualify, which is why this category belongs to it. Some other features of the third-largest bank in the U.S. include discounted rates for qualifying Wells Fargo checking accounts and fairly minimal fees.
| Pros | Cons |
|---|---|
|
Borrowers can borrow from $3,000 to $100,000 |
Borrowers who don't have banking relationship with Wells Fargo will have to apply in person |
|
Repayment terms range from 12 to 84 months |
There are o options to pre-qualify |
|
5.74% to 24.49% APR with relationship discount |
|
|
600+ Credit Score |
|
|
No origination fees |
|
|
Funds can be received as soon as the next day of the application |
|
LightStream: Lowest APR
The bank with the lowest rates for personal loans is LightStream. LightStream is the online lending division of Truist, the holding company that emerged from BB&T Corporation and SunTrust Banks, Inc.’s merger. The main feature of a LightStream personal loan is an APR range of 3.99% to 16.49% with autopay. In addition to this, the borrowing limit is also up to $100,000, making it the choice of borrowers for home improvement.
| Pros | Cons |
|---|---|
|
Borrowers can borrow from $5,000 to $100,000 |
There are no options to pre-qualify |
|
Repayment terms range from 24 to 144 months |
Stringent requirements and may require a credit score of at least 680 |
|
3.99% to 16.49% APR |
|
|
No late payment, hidden and origination fees |
|
|
No origination fees |
|
|
Funds can be received as soon as the next day of the application |
|
PNC: Best for low credit score
PNC Bank doesn’t require a specific credit score to qualify for personal loans. Nonetheless, it is necessary for the borrower to have a good credit history, meaning that you should have a clean loan repayment record to qualify. It’s the best choice for those with low credit scores because PNC allows a co-applicant or co-sign option, which can help with the approval process. Having a cosigner can also afford you lower rates if someone with a high credit score guarantees your loan payments. There are also rate discounts if you choose autopay using a PNC checking account.
| Pros | Cons |
|---|---|
|
Repayment terms range from 6 to 60 months |
Borrowers can only borrow a maximum of $20,000 |
|
APR: 9.24 - 29.49% |
1% or $40 late fee (whichever is higher) |
|
No minimun credit score |
Not available in all states |
|
Co-sign option |
|
|
No origination fees |
|
|
Can get the money within two business days |
|
|
0.25% interest rate discount for a qualified checking account |
|
Citibank: Approved Guaranteed
While there are no banks that offer a hundred percent guaranteed approval, Citibank does make it easier for existing clients and those who fall under the low annual income bracket to avail of its credit product. In fact, personal loans with Citibank are exclusive to clients with checking accounts, and the yearly income it requires is only $10,500, which is vastly lower than other banks. And since the bank also allows co-applicants, even those with low credit scores can obtain loan approval.
| Pros | Cons |
|---|---|
|
Borrowers can borrow between $2,000 up to $30,000 |
No pre-qualification option |
|
Repayment terms range rom 30 to 60 months |
Take 5 business days to get the funds |
|
APR: 7.99% - 23.99% |
Loans are not available to non-banking clients of Citibank |
|
670+ Credit Score |
|
|
No origination fees |
|
|
Can earn rewards |
|
How to qualify for a bank personal loan
To qualify for a personal loan, you would first need to complete the bank’s application form and then submit a set of documents. While requirements are varying, some of the inherent ones among banks are the following:
- Proof of Identity. This, of course, can be in the form of your passport, state-issued I.D., Driver’s license, Birth Certificate, Military ID, or Certificate of Citizenship. Lenders ask for this so they can verify if you are indeed a citizen of the United States and that you are of legal age to take out a loan.
- Proof of Address. Unless you have an existing account with the bank you’re applying for a loan from, you would first have to supply proof of address. Creditors use proof of address to understand how stable your lifestyle is since some valid proof of address documents can only be accomplished if you have enough income to support a certain standard of living. Such documents include utility bills, lease agreements, home insurance, etc.
- Proof of Income. For obvious reasons, proof of income is also a necessary document in your loan application. So be prepared to submit either your pay stubs, bank statements, W-2s and 1099s, tax returns, and even your employer’s contact details.
No all banks requirements are the same, you must be sure what are the requirements of your go-to bank before the qualifying process.
Alternatives to bank personal loans
Loan applications can be a frustrating process with banks because they try to ensure that the risk of lending you money is minimal as much as possible. With that in mind, there are alternative options that are worth your consideration, like quick cash or a payday loan.
There are also loans you can get even if you don’t have a bank account. One of which is with Regional Finance. Regional Finance can loan you up to $10,000 even if your credit score is only 580. The downside is that you must present collateral to secure the loan, but the good thing is that the only security Regional Finance needs are small electronic items like DVD players or larger ones like a TV.
Frequently Asked Questions (FAQ)
That depends on several factors and possibly even some personal preferences. But generally, online lenders may have an advantage over traditional banks when it comes to convenience. It’s much easier with online lenders to get approval for a personal loan, but it usually comes with relatively higher costs.
Normally, once an application is approved, banks will deposit the funds to your bank account within two to five working days. Other banks like LightStream can transfer the loaned amount within the same day.
You can breakdown the loan application process into five simple steps:
- First, figure out how much money you need and the purpose of your loan.
- Check if your eligibility by evaluating your bank’s requirements.
- Calculate how much your installments will be and determine you can afford it.
- Compare it with other lenders.
- Once you’ve decided, ready your documents and accomplish an application for or approach your bank.
Applying for a loan in person is undoubtedly inconvenient, but it does enable you to verbalize your financial situation and would, in some cases, allow the banking personnel to help you select the right credit product.
There are several causes for this, but the most common reason why a lender would reject your loan application is that you have a history of late or non-payments. Another one is your debt to income ratio could already be too high.
