Published in: Personal Loans | Sept. 7, 2019

How to Get a Personal Loan From a Bank

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Interested in getting a personal loan from a bank? Follow these tips to complete the process and get the funds you need.

Personal loans can help you to fund big purchases or consolidate existing debt at a lower rate. But, you’ll need to qualify for and obtain a personal loan from the right lender. There are many options for lenders to choose from, including credit unions, online lenders, and banks

It is usually worth starting with a bank you already have a relationship with. Find out their qualifying requirements and rates so that you can compare them with other local and national banks, as well as other lender types. Submit your loan application online or in person with the bank branch, and wait for approval. Once approved, read the terms and conditions carefully to make sure you can repay what you borrow, and specify how you want your funds delivered.

Bank staffer firmly pressing wad of cash directly into customer's hand.

Image source: Getty Images

These steps can get a little complicated, so this guide will help you through the process of obtaining a personal loan from a bank. 

Start with a bank you already have a relationship with

If you’ve decided to borrow money, the financial institution where you have your checking account, savings account, or other loans is a good place to start. This can be beneficial because many banks offer relationship discounts. For example, you may be able to save on the interest rate for your loan, reduce loan origination fees, or qualify for an autopay discount.

In some cases, it may also be easier to get approved for a loan with a bank where you have existing accounts. This is especially true if you don’t have very good credit. The bank may be willing to offer you a secured loan that uses your checking or savings account as collateral for the money you borrow. 

Find out qualifying requirements and compare rates and terms

Different lenders have different rules regarding who can qualify for a loan. Typically, however, you will only be eligible if you meet your lender’s minimum credit score and income requirements. If your score is too low and your bank feels you may not be able to repay the debt, or if your income isn’t high enough for you to comfortably make payments, your bank may deny your loan. 

If you don’t meet your bank’s requirements, don’t give up -- there are other personal loan options to explore. For example, your local bank may have more stringent regulations than those of online lenders -- especially those that offer loans for bad-credit borrowers, or advertise that they’re willing to consider factors other than your credit score when deciding whether to approve you. Just be careful and read the fine print of any loan you apply for, as some online lenders -- especially those advertising bad credit loans -- may be scams or may offer unfavorable terms to borrowers. 

And even if you do meet your bank’s requirements, you should still check out other lenders. Many lenders, including some local banks, allow you to compare rates and get preapproval without formally applying for a loan. This is beneficial because you won’t need to get a hard credit check that could affect your credit score. Be aware that hard credit checks will appear on your credit report for two years -- and too many inquiries over a short period of time will lower your score. 

Find out the terms of the loan your bank is offering, including the interest rate you’ll owe, any fees you’ll be charged, whether the rate is fixed or variable, and what your options are for repayment terms. 

Make sure you compare quotes from your bank with those of at least three to four other financial institutions to ensure you’re getting the most affordable loan possible. 

Submit your loan application

After finding out which bank or other lender offers the best rates and loan terms and potentially getting pre-approved, submit a formal application with one lender of your choosing. You don’t want to submit multiple applications, because when you actually apply for credit, this is when an inquiry is placed on your credit report.  

Almost every lender, including local banks, now offer online loan applications. However, you may prefer to submit an application in person if you don’t want to scan financial documents, or if you want someone at the bank to help you complete the process. The ability to apply in person is one of the major benefits of applying for a loan with your bank, or with another bank that has a local presence, rather than choosing an online-only lender. 

Wait for approval

If you’ve already been preapproved, chances are good that you’ll get the loan you applied for -- although preapproval isn’t always a guarantee of final approval. 

Some banks will approve you quickly, even within minutes or hours of submitting your application. Others may take several days or weeks to review your application and approve you for financing. If you need the money quickly, check with your bank about the timeline for approval. 

Read the terms and conditions

Once approved, the bank will send you loan documents to sign. Make sure to read them carefully and check that the interest rate, fees, and other costs are what you expected. Be sure there are no add-ons you didn’t want, such as loan protection insurance

Also check again to be sure you know what your loan payments will be and that there is room in your budget to pay them. You don’t want to ruin your credit by taking out a loan you can’t afford to pay back. 

Get your money 

Finally, you’ll need to tell the bank where to deposit your funds. Many banks can deposit your borrowed money right into your checking account -- especially if you already have an account with the bank. The lender may also give you a check for the borrowed money, which you’d then be able to deposit into your account. 

Now you know how to get a personal loan from a bank

Now you know the steps involved in getting a personal loan from a bank. The borrowing process should be pretty quick and easy as long as you qualify for the loan and know what to expect. Just remember to always compare all your lending options -- don’t just assume your bank offers the best deal. When you borrow, you don’t want to pay any more than is necessary, and there are many possible lenders out there. 

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