Which Bank is Best for a Personal Loan?

When managing personal finances, there comes a time when we need a little extra financial assistance. Whether for a home renovation, a dream vacation, or to consolidate high-interest debts, a personal loan from a reputable bank can be a viable solution.

But with so many banks vying for your attention, knowing which bank is best for personal loan that suits your unique needs is essential.

This comprehensive guide will explore the best personal loan options from big banks, institutions, and some niche players. We’ll also delve into the pros and cons of bank loans and provide valuable insights on securing a personal loan from a bank.

Meanwhile, use Beem to find the best personal loan offers for your needs. Compare between different options and see what works for you before you apply for the loan.

Which Bank is Best for Personal Loan

Big banks are often the first place people turn to when seeking a personal loan due to their established reputation and widespread presence. Here, we’ll discuss some of the best banks for personal loans.

Best for Smaller Loans: PenFed Personal Loans

PenFed, short for Pentagon Federal Credit Union, stands out for its small personal loans and inclusive membership policy. Offering loans as low as $600, PenFed caters to various needs like debt consolidation, home improvement, and medical expenses.

While membership isn’t obligatory for applying, it’s required to access funds, necessitating a $5 balance in a qualifying savings account. However, PenFed disburses loan amounts as paper checks, potentially inconveniencing borrowers who must opt for costly expedited shipping, especially if they live far from a branch.

Pros:

• PenFed’s membership is open to a wide range of individuals, increasing the pool of potential borrowers.
• The ability to borrow as little as $600 caters to those with modest financing needs.
• Physical Check Pickup
• Co-Borrower Option: 

Cons:

• Funds Delivered by Check
• Membership Required for Fund Access
• Those distant from a branch should budget for expedited shipping costs to receive checks promptly.
• Limited Maximum Loan Amount of $50,000
• Late Fee of $29

also know about : Switching banks – The right way to do it

Best for Quick Approval: American Express® Personal Loans

American Express Personal Loans offer swift approvals, often granting decisions within seconds, provided no additional information is needed.

However, eligibility requires holding an existing American Express card. With fixed interest rates ranging from 6.91% to 19.97%, a higher credit score secures more favorable terms.

Loan purposes encompass weddings, moving, renovations, vacations, or debt consolidation, but not debt repayment on American Express cards, education, real estate, business, securities, or vehicle payments (except down payments).

Funds typically arrive within three to five business days, ensuring timely financial assistance.

Pros:

• No Origination or Early Payoff Fees
• Same-Day Decision in Seconds (In most cases)
• Option to Pay Creditors Directly
• Funds Can Be Disbursed via Direct Deposit

Cons:

• Late Fee of $39
• No Autopay Discount
• No Cosigners or Joint Applications
• Only American Express Cardholders Can Apply
• Payment Due Date Cannot Be Changed.
• Funds Cannot Be Used to Pay Off American Express Credit Cards.

Also Read: Are Personal Loans Tax Deductible?

Best for Next-day Funding: Discover Personal Loans

Discover Personal Loans excel in providing quick access to funds, catering to borrowers who require rapid financial assistance.

These versatile loans suit various purposes, including debt consolidation, home improvement, weddings, and vacations. Discover does not charge origination fees, although a $39 late fee applies to missed monthly payments.

Interest rates range from 5.99% to 24.99%, depending on your creditworthiness. Discover’s no prepayment penalties allow extra payments within the same month to reduce interest expenses.

For debt consolidation, Discover simplifies the process with direct creditor payments, and swift fund disbursement ensures funds reach your account as early as the next business day, guaranteeing approval within a week.

Pros:

• No Origination or Early Payoff Fees 
• Same-Day Decision (in Most Cases)
• Option to Pay Creditors Directly
• 7 Different Payment Options

Cons:

• Late Fee of $39
• No Autopay Discount
• No Cosigners or Joint Applications

Best for Secured Loan Options: Navy Federal Credit Union

Navy Federal Credit Union stands out with its comprehensive personal loan options tailored to military-affiliated members, including active-duty personnel and families. They offer five unique loan choices with distinct terms, interest rates, and funding limits.

Notably, their secured loans, including savings and certificate-secured options, provide flexibility with loan amounts ranging from $250 to $50,000, free from origination fees or prepayment penalties, and permit joint applications. Navy Federal’s accessibility extends to all 50 states.

Pros:

• Loan amounts range from $250 to $50,000, accommodating various funding needs.
• Navy Federal offers budget-friendly terms, no fees, and prepayment flexibility.
• Applying with a co-borrower enhances approval chances and may secure better loan terms.
• Navy Federal serves all 50 states, benefiting borrowers nationwide.

Cons:

• Membership is limited to military, veterans, DoD, and eligible family members.
• The lowest APR offered by Navy Federal Credit Union is higher than some other lenders.
• late Fee of $29
• Certain loans require a phone or in-person application, limiting convenience.

Best for Investors: TD Bank

TD Bank is an attractive choice for investors seeking financial consolidation, offering various investment options alongside personal loans. While welcoming investors of all levels, its full suite benefits those with over $750,000 in assets.

TD Bank’s loans feature competitive interest rates and a natural disaster assistance program. However, accessibility is limited to just 15 states and Washington D.C. and does not permit joint applicants or cosigners, emphasizing individual creditworthiness for loan qualification.

Pros:

• Competitive interest rates from TD Bank benefit borrowers.
• TD Bank’s natural disaster support program refunds eligible late fees and offers a 90-day loan deferment during crises.

Cons:

• TD Bank’s loans are available in 15 states and Washington D.C., limiting access.
• No joint applicants or cosigners; borrowers qualify individually financially.

Pros and Cons of Bank Loans

Now that we’ve discussed some of the best banks for personal loans let’s look at the pros and cons of obtaining a personal loan from a bank.

Pros of Bank Loans

1. Reputation and Trustworthiness: Banks are established financial institutions with a long history of serving customers. This gives borrowers a sense of security and trust when obtaining a loan.

2. Competitive Interest Rates: Banks often offer competitive interest rates, especially to borrowers with good credit. This can result in lower overall borrowing costs.

3. Flexible Use of Funds: Personal loans from banks can typically be used for various purposes, giving borrowers flexibility in how they use the funds.

4. Variety of Loan Terms: Banks offer various loan terms, allowing borrowers to choose a repayment schedule that fits their budget.

Cons of Bank Loans

1. Strict Eligibility Requirements: Banks typically have strict eligibility criteria, making it challenging for individuals with lower credit scores to qualify for loans.

2. Lengthy Approval Process: While some banks offer quick approvals, others may have a more extended approval process, causing delays for borrowers in urgent situations.

3. Prepayment Penalties: Some banks may impose prepayment penalties, meaning you’ll face additional fees if you decide to pay off your loan early.

4. Limited Accessibility: Some banks may require existing account relationships or specific membership criteria, limiting accessibility for certain borrowers.

How to Get a Personal Loan From a Bank

Now that you’re well-informed about the best banks and credit unions for personal loans, let’s walk through the steps to secure a personal loan from a bank.

1. Check Your Credit Score: Before applying for a personal loan, check your credit score, as banks heavily consider it for eligibility and interest rates. 

2. Research Banks and Credit Unions: Research various banks and credit unions to find the best loan terms, interest rates, and eligibility requirements.

3. Gather Necessary Documents: Gather essential documents, including proof of identity, income, and employment, such as pay stubs, bank statements, and tax returns.

4. Complete the Application: Most banks offer convenient online applications; fill them out accurately and truthfully.

5. Review Loan Offers: Carefully review multiple loan offers, considering terms, interest rates, and repayment schedules to select the best fit.

6. Accept the Loan Offer: Once you’ve selected an offer, accept the terms and conditions after thoroughly understanding them.

7. Provide Additional Information: Be responsive to the bank’s requests for extra documentation or information during the underwriting process.

8. Await Approval and Funding: After approval, funds will be deposited into your designated bank account, typically within minutes or a few business days, depending on the bank.

9. Make Timely Payments: Ensure on-time payments according to the agreed schedule after receiving the loan to grow credit score and financial stability.

Conclusion

In conclusion, when determining which bank is best for personal loan, consider your specific needs, creditworthiness, and the features that matter most to you, whether it’s quick approval, lower interest rates, or flexible terms.

Following the steps outlined in this guide, you can secure the personal loan that best suits your financial goals and embark on your journey toward achieving your dreams and addressing your financial needs.

Beem can help you understand your loan options, improve your creditworthiness, and explore alternative lenders to enhance your chances of getting a personal loan that meets your needs. Remember that responsible borrowing is critical to maintaining your financial well-being.