Most major banks and credit unions offer personal loans, but the terms, rates, and speed vary widely
Personal loans are available from national banks, regional banks, credit unions, and online lenders. The bank you choose affects your interest rate, how fast you get the money, and what documents you need to provide. Some banks focus on borrowers with strong credit; others work with people rebuilding credit. Some fund loans in days; others take weeks.
The lender you pick matters because the same loan amount can cost you hundreds or thousands of dollars more depending on the interest rate they offer you. A $10,000 personal loan at 8% costs less in interest than the same loan at 15%. Your credit score, income, debt-to-income ratio, and the lender's own underwriting rules all affect what rate you receive.
Key Takeaways
- National banks like Chase, Bank of America, and Wells Fargo offer personal loans, but typically require good to excellent credit and may have higher minimum loan amounts.
- Credit unions often have lower rates and more flexible credit requirements than banks, but you must be a member to borrow.
- Online lenders fund loans faster than traditional banks but may charge higher interest rates, especially for borrowers with fair or poor credit.
- Your interest rate depends on your credit score, income, and debt levels — the same lender will offer different rates to different borrowers.
- Before you commit to any lender, compare the annual percentage rate (APR), origination fees, and repayment terms across at least three options.
National banks and what they typically require
Chase, Bank of America, Wells Fargo, and Citibank all offer personal loans. These banks generally require a credit score of 670 or higher, though some borrowers with scores in the 620 range have been approved. They typically lend between $3,500 and $35,000, though the exact range varies by bank and your financial profile.
National banks usually take 5 to 10 business days to fund a loan after approval. They charge origination fees (typically 1% to 6% of the loan amount) and may require you to have an existing account with them or meet a minimum income threshold. Interest rates at national banks generally range from 6% to 18% APR, depending on your creditworthiness.
The advantage of borrowing from a national bank is stability and the possibility of a lower rate if your credit is strong. The disadvantage is that they are less flexible with borrowers who have fair credit or limited credit history, and their approval process can be slower than online lenders.
Credit unions and membership requirements
Credit unions often offer personal loans with lower rates and more lenient credit requirements than banks. Many credit unions will work with borrowers whose credit scores are in the 580 to 620 range, and some have no minimum credit score requirement at all. Interest rates at credit unions typically range from 5% to 12% APR.
The catch is membership: you must join the credit union before you can borrow. Membership requirements vary. Some credit unions are open to anyone in a geographic area; others require you to work for a specific employer, belong to a certain organization, or have a family member who is already a member. Once you join, the process is usually faster than at a national bank — many credit unions fund loans within 2 to 5 business days.
To find a credit union you may be may be able to access to join, search the CO-OP Network or Alliant Credit Union's directory. If you already belong to a credit union, contact them directly about personal loan terms before looking elsewhere.
Online lenders and speed versus cost
Online lenders like LendingClub, Upstart, Prosper, and SoFi fund loans faster than traditional banks — often within 1 to 3 business days. They also work with a wider range of credit profiles, including borrowers with fair credit (scores around 580 and up). Many online lenders do not require a minimum income or employment history.
The trade-off is cost. Online lenders charge higher interest rates on average than banks or credit unions, especially for borrowers with fair or poor credit. APRs can range from 6% to 36% depending on the lender and your credit profile. Some online lenders also charge origination fees, prepayment penalties, or late fees that add to the total cost.
Online lenders are useful when you need money quickly or when your credit score is too low for a bank to consider you. Before you commit, read the fine print about fees and whether you can pay off the loan early without penalty.
What lenders look at when they decide your rate
Every lender uses a credit score as a starting point, but they also examine your income, employment history, existing debt, and debt-to-income ratio. Your debt-to-income ratio is the percentage of your monthly income that goes toward debt payments. If you earn $3,000 a month and pay $900 toward existing debts, your ratio is 30%. Most lenders want to see a ratio below 43%.
The same lender will offer different rates to different borrowers based on these factors. If you have a credit score of 720 and a debt-to-income ratio of 25%, you will receive a lower rate than someone with a score of 680 and a ratio of 40%, even if you both explore to the same lender on the same day.
Some lenders also consider alternative data — rental payment history, utility payments, or bank account activity — if your traditional credit file is thin. This can help borrowers with limited credit history get approved at a better rate.
Comparing offers side by side
When you receive loan offers, compare the annual percentage rate (APR), not just the interest rate. The APR includes the interest rate plus fees, so it shows the true cost of borrowing. A loan with a 10% interest rate and a 3% origination fee will have a higher APR than a loan with a 10% interest rate and no origination fee.
Also compare the loan term (how long you have to repay), the monthly payment, and the total amount you will pay back. A longer term means a lower monthly payment but more interest paid overall. A $10,000 loan at 10% APR costs $1,038 in interest over 3 years but $2,748 over 7 years.
Request quotes from at least three lenders before deciding. Many lenders let you check your rate without a hard credit inquiry, which means checking your rate does not hurt your credit score. Once you are ready to move forward, the lender will do a hard inquiry, which does affect your score slightly and temporarily.
Banks that work with fair or poor credit
If your credit score is below 620, traditional banks will likely decline you. Online lenders and some credit unions are more willing to work with lower credit scores. LendingClub, Upstart, and OppFi are examples of online lenders that fund loans for borrowers with fair or poor credit, though at higher interest rates.
Some credit unions also have programs specifically for borrowers rebuilding credit. These loans may have smaller amounts, shorter terms, or require a savings account as collateral, but they can help you borrow when banks will not. Ask your credit union whether they offer credit-builder loans or personal loans for members with lower credit scores.
Be cautious of lenders that may provide approval or claim to ignore your credit score entirely. Legitimate lenders always assess your ability to repay; they just use different criteria than banks do.
Frequently Asked Questions
Do I need to be a customer of a bank to get a personal loan from them?
Not always, but some banks prefer or require existing customers. Chase and Bank of America, for example, may offer better rates to customers with checking or savings accounts. Credit unions require membership, which you can usually establish quickly. Online lenders have no account requirement.
What is the difference between a personal loan and a credit card?
A personal loan gives you a lump sum upfront that you repay in fixed monthly installments over a set period (usually 2 to 7 years). A credit card is a revolving line of credit where you can borrow, repay, and borrow again. Personal loans typically have lower interest rates but less flexibility; credit cards have higher rates but more flexibility.
Can I get a personal loan if I am self-employed?
Yes, but you will need to provide tax returns or profit-and-loss statements to prove your income. Online lenders and credit unions are often more flexible with self-employed borrowers than national banks. Be prepared to show at least two years of business income.
How long does it take to get approved for a personal loan?
Online lenders typically approve and fund within 1 to 3 business days. Credit unions usually take 2 to 5 business days. National banks often take 5 to 10 business days. Some lenders offer same-day approval but may take longer to fund the actual money into your account.
What happens to my credit score when I explore for a personal loan?
A hard credit inquiry (which happens when you formally explore) lowers your score by a few points temporarily. Multiple applications within 14 to 45 days usually count as a single inquiry, so comparing rates from several lenders does not hurt as much as you might think. Your score recovers within a few months.