Best Banks for Personal Loans

Banks do more than checking and savings and ATMs. A personal loan from a bank often offers perks that other lenders don't, including rate discounts and personalized service. But there can be drawbacks as well. Banks tend to prefer borrowers with high credit scores and existing customers may get the lowest rates. Plus, loan approval could take longer compared to online lenders.

Our picks for the best banks for personal loans include LendingClub, Axos Bank, SoFi, and Citi.

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Best banks for personal loans

Other banks that offer personal loans

How bank loans compare to other lenders

Depending on your credit score and your financial needs, you may find that an online lender or credit union is a better fit. Here's how those lenders compare to banks.

Bank loans vs credit union loans

“While banks offer convenience and higher loan amounts, they might also have higher fees and interest rates compared to credit unions, which are member-owned and often provide more favorable terms,” says Sean Briscoe, Director of Products and Payments at Alliant Credit Union.

For example, banks charge an average interest rate of 12.06% for a three-year personal loan, while credit unions charge an average of 10.72%, according to the National Credit Union Administration (NCUA). Rates on credit union loans are currently capped at 18%, while maximum bank loan rates may range higher.

Although the Federal Credit Union Act generally limits interest rates on personal loans to 15%, the NCUA board has the ability to raise the limit temporarily. The NCUA board voted to raise this rate to 18%, which is the current cap — it's set to expire in March 2026.

Credit unions may also have less stringent eligibility requirements for personal loans than banks. Credit unions require membership, however. It's often free to join, but you may need to meet certain requirements, such as living in a certain location or being a member of a specific profession.

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Explore: Best Credit Unions for Personal Loans

Bank loans vs. online lenders

One feature that endears banks to many consumers is their ability to provide face-to-face customer service. Online-only lenders and fintechs don't typically have branch locations like a traditional bank, so you often can't meet with a loan officer in person. However, most online lenders offer options for getting help by email, chat, or phone. Online lenders may also offer a more convenient application process and faster funding.

Importantly, fintechs aren’t banks and need to partner with a bank in order to offer loans. In many circumstances, this won’t hurt the consumer. However, given that two entities are tied to the loan (the bank and the fintech), establishing accountability could be muddied if issues arise with the loan or its handling. This in turn could impact customer service or potentially prolong disputes or limit legal protections in a court of law.

Always review a loan offer carefully before accepting. “You should read the fine print (the note, agreement, terms and conditions) to ensure the loan does not have an escalating rate or exorbitant fees in case you default,” says Teri Williams, President and COO of OneUnited Bank.

Explore: Best Online Personal Loans

What are the requirements for a bank loan?

Eligibility requirements for personal loans vary from lender to lender. However, here are some general rules of thumb to keep in mind:

• Credit score: Some lenders offer personal loans for bad credit or no credit history. However, a good to exceptional FICO score gives you the best chance of securing a loan with a favorable APR. A bank may have stricter credit requirements than a credit union or online lender. Check your credit score before applying to make sure you meet the bank's minimum requirements.
• Debt-to-income ratio (DTI): Your DTI tells lenders how much of your pre-tax monthly income goes toward debt payments. Lenders generally prefer a DTI under 36% for personal loans. To calculate your DTI, add your monthly debt payments and divide the total by your monthly income before taxes and deductions.
• Income: Some lenders have minimum income requirements, although they don’t always disclose them. For example, Discover requires a minimum individual or household income of $25,000 per year to qualify for a personal loan.
• Citizenship status: Banks often require you to be a United States citizen or permanent resident to qualify for funding. Some banks offer loans for non-citizens who are permanent residents, although they may have to meet additional eligibility requirements.
• Age: Lenders can decline to lend money to people who are too young to enter into a legal contract. In most states, the age of majority is 18.
• Customer relationship: Some banks offer loans only to existing account holders, while others, such as U.S. Bank, issue personal loans to borrowers who bank elsewhere.

Related: What Are the Requirements for a Personal Loan?

How to get a personal loan from a bank

While the application process varies by bank, you'll generally take the following steps:

1. Research your options: Many banks offer an online prequalification tool you can use to compare estimated rates, fees, and terms. The rates and terms of an official loan offer may differ from your prequalification results, which do not represent offers of credit. With some banks, you'll also have the option to meet with a loan officer in person and discuss your options. 
2. Choose your repayment term: If you have a choice between more than one repayment term, choose the shortest one that has a monthly payment you can comfortably afford. You might have a smaller monthly payment with a longer term, but the tradeoff is paying more in interest over the life of the loan. Use a personal loan calculator to see how the length of your repayment term affects monthly payments and total interest costs.
3. Formally apply: Fill out the required forms online or in person. You'll need to supply documentation that verifies your identity, income, and address, and you may be asked for supplemental documentation to prove your employment or identity.
4. Get funded: Read your loan agreement and make sure you're happy with the rates and terms offered, which may differ from prequalification estimates. Sign your loan documents to initiate funding.

Related: How To Get a Personal Loan

How to get a bank loan with bad credit

FICO scores range from 300 to 850. Lenders tend to see borrowers with higher credit scores as less risky. If you have a FICO score below 580, your credit is considered bad or poor.

It can be harder to get a bad-credit loan, but you have options that could improve your chances and potentially lower your interest rate:

• Apply with a cosigner: If you have a good friend or family member with good credit who is willing to share responsibility for your loan, find a lender that allows cosigners. A cosigner must make payments if you can't, and your loan appears on their credit.
• Get a secured personal loan: Some lenders offer secured personal loans, which require pledging an asset that the lender can seize if you default. The collateral could be a vehicle, home, savings account, or an item such as a watch or jewelry.
• Seek a smaller loan amount: It's possible that the amount you want to borrow is more than lenders think you can afford. Try asking for a smaller loan amount.
• Document your income: Briscoe says consistent income can help you get approved if you have bad credit. "Demonstrating a stable and sufficient income can reassure lenders of your ability to repay the loan," he says.
• Apply for a credit-builder loan: Some small banks, online lenders, and credit unions offer small credit-builder loans that work like a personal loan in reverse. Instead of getting the loan funds immediately, you make monthly payments until you unlock the account and gain access to the money. Payment history accounts for 35% of your FICO score, so successfully paying off a credit-builder loan not only gives you access to the loan funds but can have a positive effect on the biggest component of your credit score.

Check Out: How To Build Your Credit: A Step-by-Step Guide

How to protect your information online

It's reasonable to be concerned about the security of your personal information when you shop for or apply for a loan online. Fortunately, banks and other reputable lenders use high-tech tools including encryption software and multifactor authentication to help keep your information safe from hackers, scammers, and other online threats.

You can also take steps on your own to protect your personal information, including:

• Avoid non-secure websites: Always make sure the address of the website you're visiting begins with "https" rather than "http." The "s" stands for secure, meaning that the site encrypts your information.
• Use multifactor authentication: If a lender offers multifactor authentication (MFA), take advantage of it. MFA provides additional layers of security beyond your login and password. Examples include access codes sent to you by text message or biometric data such as your face or fingerprint.
• Use strong passwords: Using a simple password based on your name or other publicly available information (like the name of the pet you post photos of on social media) can make you more vulnerable to scammers. Many operating systems and programs can create strong, hard-to-guess passwords for you.
• Be cautious about text messages and emails: Scammers can try to impersonate your bank or credit card company through text or email, requesting your login information or tempting you to click a link to a fraudulent website. If you receive an unsolicited text message or email, contact your bank by phone. Don't reply directly, and don't click on any links.

These tips apply not only to banking and lending but also to any type of online activity. 

Pros and cons of personal loans

Pros

• Lower average interest rates than credit cards: A two-year personal loan has an average interest rate of 11.14% compared to an average rate of 21.39% for credit cards, according to the Federal Reserve. Lower interest rates can make personal loans particularly useful for consolidating credit card debt: "You can take out a personal loan to consolidate high-interest debts, such as credit card balances, into a single loan with a potentially lower interest rate," says Briscoe.
• Easy application and quick funding: Many personal loan lenders offer an easy online application process and can transfer the cash to your bank account within a few days of approval. With debt consolidation loans, some lenders offer the option to send the money directly to your creditors.
• Predictable payments: Personal loans provide a lump sum to be repaid in installments, often with a fixed interest rate, which keeps monthly payments the same over the life of the loan and makes it easier to budget for repayment.
• Flexible use of funds: Banks and other lenders offer personal loans for a number of approved purposes, including debt consolidation, home improvements, medical bills, major purchases, and more.
• No collateral required for unsecured loans: Most personal loans are unsecured, so you don't need to pledge your home, vehicle, or another asset as collateral.

Cons

• Some lenders charge fees: Personal loans may come with fees, including an origination fee that is deducted upfront from the loan amount. You may also be charged for late payments or insufficient funds.
• Loan applications typically involve a hard credit inquiry: A hard credit inquiry can lower your credit score by up to 10 points for up to one year.
• Higher interest rates than some other options: A home equity loan or home equity line of credit could have a lower interest rate than a personal loan, along with a credit card with a 0% APR introductory period.

Learn More: Should I Get a Personal Loan?

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best banks that offer personal loans. We chose the best lenders based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible’s team of experts gathered information from each lender’s website and from our partners directly. We also considered each of our partner lenders’ statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it’s accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.