Online Loan Vs. In-Person Loan: Which One Is Right For You?

Choosing between online and in-person loans can be difficult, especially for people unfamiliar with the loan process. Online loans generally have simpler borrowing processes and streamlined applications. However, they are less personal as compared to in-person loans. Suppose the borrower is new to the borrowing process. In that case, they might find brick-and-mortar banks and face-to-face interactions more reassuring.

The decision depends entirely on your financial situation and perspective. Let’s analyze both processes below to help you make that decision.

Online loan

A direct online lender is one that potential borrowers can apply for without submitting a physical application at the lender’s physical store. That could also allow the applicants to prequalify with several lenders online without being subjected to hard credit checks, which reduces their credit score.

When to apply for an online loan

Online loan application typically provides a more simplified experience for new borrowers. Online loans are fast, and borrowers can prefer them over applying for a loan in person in urgent financial situations. Here are some cases where online loans would be better for you:

  • Prequalified loans: Many online lenders let potential borrowers prequalify for a loan with only a soft credit check based on their borrowing needs and credit score. If you are still determining how much money you will qualify for or whether you will qualify for a competitive rate, choose an online lender that allows prequalification.
  • If you don’t have an existing relationship with a bank: Some banks offer better interest rates & perks to customers who already bank with them. Online loans might be better for you if you don’t have an existing banking relationship.
  • Need cash quickly: Online lenders generally have a faster approval time and funding speed than credit unions and banks. Borrowers who apply online can receive money the same day or within the next business day.
  • No credit history or bad credit score: Online lenders use alternative credit information like utility bills payment history to make lending decisions. This can help people with no credit history or bad credit scores to get approved.

In-person loans

An in-person loan requires the borrower to visit a lender’s brick-and-mortar office rather than applying for it online. These loans are usually offered through traditional financial institutions like banks and credit unions.

When to apply for an in-person loan

For some borrowers, applying for a loan in person can simplify the borrowing process and get them lower rates and fees. Here are some situations where in-person loans would be better for you:

  • Find it unreliable to submit personal info online: Online lenders have numerous security measures to ensure the safety of borrowers’ personal information. However, suppose you still need to figure out how to submit things like your Social Security number (SSN) to an online application portal. In that case, you can go for an in-person loan.
  • Existing banking relationship: Borrowers who already have a relationship with a local bank or any other brick-and-mortar financial institution can use in-person loans. An existing relationship can speed up the application process, but they may offer you better terms & conditions.
  • Lower rates or fees: Even if you don’t have an existing account with the bank, it is still possible to qualify for a competitive interest rate. To do so, you can visit the lender offering the lowest overall borrowing cost.
  • Trust the face-to-face lending experience: Online lending has many benefits, but it won’t let applicants meet an officer face-to-face. By applying for a loan in person, potential borrowers can explain their financial history, why they need the funds, and other relevant details.
  • Aren’t in urgent need of cash: Applying for a loan in person is more time-consuming than an online application. Brick-and-mortar institutions also take longer to review a loan application, approve it, and disburse the loan amount. Go for an in-person loan if you don’t need the money quickly.


Both in-person loans and online loans have their advantages & disadvantages. What would be best depends entirely on your borrowing needs, financial situation, and perspective. Moreover, what works for you may not work for someone else. Hence, analyze your requirements & finances thoroughly before you make the final decision.