Best banks for personal loans in July 2024

When it comes to financing personal projects, consolidating debt, or covering unexpected expenses, personal loans can be a valuable option. According to TransUnion, 23.5 million Americans have an unsecured personal loan. You can obtain a personal loan through online lenders as well as banks and credit unions.

Choosing the best option for you will depend on your borrowing needs. We'll guide you through some of the best banks offering personal loans, highlighting their key features, rates, and overall benefits.

Best personal loans from banks

Methodology

We evaluated the best bank loans based on customer experience, minimum fixed rates, maximum loan amounts, funding times, loan terms, fees, discounts, loan uses, and other factors. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Read our full lender rating methodology for more information.

How to compare bank loans

You can often prequalify with a lender online to see your estimated rate and terms. Do so with at least three lenders to get an idea of what you may qualify for. Keep in mind that prequalification is not a final offer, and you may not qualify for the same rate when you formally apply.

To compare bank loans, it's important to consider several factors about each lender, including:

• Loan amount: Personal loan lenders tend to offer loan amounts between $500 and $50,000 or more. Make sure the bank offers the amount you need.
• Annual percentage rate (APR): The APR is the total cost of borrowing, expressed as a percentage, and includes the interest rate and upfront fees the lender charges.
• Interest rate: This is one part of the cost of borrowing, and is the percentage of the loan you'll pay in interest.
• Fees: These may include origination fees (which can be up to 12% of the total loan amount), prepayment penalties, and late fees.
• Loan term: Repayment terms typically range from 2 to 7 years, but this varies by lender. The longer the term, the more you'll pay in interest over the life of the loan.
• Monthly payment amount: This is how much you'll owe each month of the loan term. It's important to budget and choose a monthly payment plan that works for you.
• Total loan cost: This is the total amount you'll pay over the life of the loan. You can use a personal loan calculator to estimate your total cost.

• Collateral: If you are applying for a secured personal loan, you may be able to pledge personal assets, like a car, to strengthen your chances of approval. Keep in mind that if you default on the loan, your asset may be seized.
• Funding time: This is the amount of time it takes the bank to send the loan funds to you. Depending on the lender, funds can be distributed as soon as the same day, but may take up to a week or more.
• Customer service quality: The availability of a lender's customer support representatives and the quality of the help they provide is an important factor to look at. You can check the Better Business Bureau or Trustpilot to see reviews from customers.

Weighing these factors can help you figure out the pros and cons of different banks so it's easier to see which is best for your situation.

How do personal loans work?

Personal loans are a type of installment loan designed to help you cover personal expenses. Upon approval, lenders provide you with a lump sum of money upfront, which you repay through a series of monthly payments over a set term.

Along with the loan amount, lenders charge interest and may sometimes have additional fees. The interest rate you're assigned will depend on the lender's rate range and the amount of risk you present as a borrower.

Borrowers that are perceived to have higher levels of risk typically get charged higher rates and costs. As for fees, some lenders charge them while others don't. Origination fees are one of the most common fees you'll come across. This covers the lender's cost of processing the loan, and is deducted upfront from your loan funds. It can be less than 1% or up to 12% of the loan amount.

To qualify for personal loans, lenders generally consider your credit history, credit score, income, employment situation, and debt-to-income ratio. In some cases, they allow you to pledge collateral to strengthen your application.

How to get a personal loan from a bank

Most banks offer a twofold application process. The first step is to check if you prequalify and see if the proposed loan meets your needs. You can often do so by filling out a short form on the bank's website and allowing a soft credit check, which won't impact your score.

If you want to move forward with a quote, you'll need to go through the full application process. During this step, banks typically ask for more detailed information about your finances and employment. They typically require a hard credit check at this stage, which will ding your score temporarily, and may ask for documents such as bank statements, pay stubs, or tax returns.

Once the bank has everything it needs, it'll review your application. If you get approved, you'll be presented with an official loan contract. Once that's signed, the bank will usually send the loan funds to your bank account.

What is a good interest rate for a personal loan?

As of February 2024, the average interest rate on a 24-month personal loan is 12.49%, according to the Federal Reserve. So, if you can get a rate around 12.00% to 13.00% or less right now, that's relatively good. But, keep in mind, rates vary by lender and are often higher for larger loan amounts and longer loan terms. Further, your interest rate may be on the higher end if you have bad credit.

There are lenders that may work with you even if you have bad credit (a FICO score below 580), but your interest rate may be as high as 35.99%.

Bank personal loans vs. online lenders

Banks aren't the only place you can find personal loans. You can also get them through non-bank online lenders like Prosper, Best Egg, and Avant. The option that's best for you will largely depend on your credit and income situation.

Many mainstream banks avoid lending to high-risk consumers, so they may not be an option if your credit score is in the poor-to-fair range (FICO scores between 300 and 669). However, if you qualify, you may receive lower maximum APRs and fewer fees.

On the other hand, non-bank lenders tend to be more lenient and may serve borrowers with less-than-ideal credit scores. However, with that leniency often comes higher maximum APRs and fees.

Pros and cons of personal loans from banks

Pros:

• In-person customer service: Many banks have physical branches where you can get in-person help.
• Competitive interest rates: Banks tend to offer competitive interest rates to members and good-credit borrowers.
• Online access: Many banks now offer online prequalification and application processes.

Cons:

• Slower funding times: It may take a few business days to receive loan funds from a bank.
• Stricter eligibility requirements: Banks often require higher credit scores than non-bank lenders.
• May require an in-person visit: Some banks may require you to visit a branch to finalize your loan.

Best banks for a personal loan with bad credit

Banks tend to have strict eligibility requirements, so generally aren't the best for borrowers with bad credit. If you find you're having trouble getting approved, check out this list of personal loan lenders that cater to borrowers with bad credit.

FAQ

Should I choose a bank or a credit union for a personal loan?

Both banks and credit unions provide competitive personal loan offerings. It's worth shopping around and collecting quotes from both, along with non-bank online lenders. Then, compare them side by side to find the best deal.

How quickly do banks approve loans?

Approval time can vary by bank. Some may offer decisions in seconds, while others require you to wait a few business days. You can typically find a lender's approval time frame on its website or by calling its customer service line.

What credit score do I need for a personal loan?

Credit score requirements vary by lender. Some require a certain minimum score while others are more lenient. However, banks generally issue the majority of their personal loans to borrowers with good-to-excellent credit (a FICO score of 670 or higher).

How much can I get from a bank loan?

The amount a bank will lend to you depends on its maximum loan limit and your credit. For example, U.S. Bank offers personal loans up to $50,000 to its banking customers, but the amount you're able to get will depend on factors like your income and credit history.

What is the easiest bank to get a personal loan from?

Many banks make it easy to apply for and receive personal loans. For example, TD Bank allows you to prequalify online without hurting your credit score, and get funds as soon as the day after approval. However, getting approved can be difficult if you have bad credit. In those cases, you may want to look to non-bank online lenders.