Online vs. In-Person Loan Application Process
Online and in-person loan applications both follow the same basic process. To apply for either type of loan, you’ll need to gather your required documents, submit your application and wait for approval.
The biggest difference between online and in-person applications lies in where you complete the application and the assistance that’s available. An in-person application requires you to visit a brick-and-mortar bank and meet with a loan officer, whereas you can apply online from the comfort of your home. Online lenders generally don’t have a loan officer who can answer your questions during the application process.
Online Loan Application Benefits
Online lenders, as well as many banks and credit unions, offer online loan applications. Applications are conveniently available 24 hours a day, so you aren’t limited by the hours of a brick-and-mortar location. Additionally, there are few physical papers to deal with as all documents are uploaded electronically.
Applying online also makes it easy for you to see if you prequalify, allowing you to view loan terms at various financial institutions before deciding which loan you want to pursue. For example, if you’re looking for an online personal loan for credit card debt consolidation, you can quickly compare three or four different online loans to see which one offers the lowest interest rate.
In general, if you are comfortable with technology, busy during normal business hours or need your loan to be approved quickly, you may fare well with an online application. Online loan platforms may also benefit those looking for different types of credit, such as an installment loan or a line of credit.
Let’s look at some of the advantages of utilizing online loan applications.
- Easier to compare loan options. You can prequalify for multiple loans at once to see which one provides the best terms for your situation.
- Faster approval time. The online approval process can be done in just a few minutes and, depending on the lender, the money can be in your account as quickly as the same day or the next business day.
- 24/7 access. Without the constraints of brick-and-mortar operating hours, you can fill out an online loan application any time day or night.
- Avoid visiting physical branches. Living far away from a physical location can make online loans an attractive option.
In-Person Loan Application Benefits
For some, applying in person might be a more favorable experience. Going to a physical bank branch allows you to meet face-to-face with a loan officer. In-person applications also mean you’ll submit documents to the loan officer right away. When compared to an online loan, submitting physical documents can prevent sensitive information from being stored on your computer or being uploaded to a potentially insecure website.
Applying in person is a good solution for those who struggle with technology and would like the assistance of a loan officer. Here are a few benefits of applying in person for a loan:
- Guidance from a loan officer. A loan officer is available to help walk you through the application process — a benefit if you have questions or concerns.
- Immediate document submission. Your necessary documents will be securely in the lender’s hands immediately, rather than submitted via an online portal.
- Potential for some additional benefits. Some lenders offer perks if you already have a bank account with them and applying in person can make it easier to take advantage of those perks.
How Loan Type Factors In
The purpose of your loan may influence whether it’s a better idea to apply online or in person. If you’re applying for an auto loan, it may make more sense to apply for a loan online to compare offers. Dealerships can charge additional markups and fees for handling your finances. Personal loans likely make more sense to apply for online as well.
Applying for a mortgage online allows you to compare different loan rates, but it doesn’t allow for any negotiation if you have a bad credit score or other complications with your finances (e.g., you’re self-employed or you’re recently divorced). Mortgages can also be quite complex, so having a person walk you through the loan process may be preferable.
Checking Your Creditworthiness
Before applying for a loan, check your credit report and credit score. Having this information ahead of time can help give you an idea of whether you’ll be approved. There are three credit bureaus in the United States — Experian, Equifax and TransUnion. You can get a free credit report from each of them once a week by going to AnnualCreditReport.com, a federal government-authorized website.
If your credit score is lower than required to get approved for a loan, there are a few ways you can work on increasing it. Start by ensuring that all information on your credit report is correct. If you notice an error, dispute the information with the credit bureau. You can also increase your credit score by making existing loan payments on time, not utilizing all available credit or waiting to apply to lengthen your credit history.
Online Lender Concerns
One of the disadvantages of applying online is the possibility of mistaking a scam for a reputable lender. Before giving any personal information to a lender, research the institution and ensure that it’s reputable. Beware of red flags that may indicate an online scam. These include pressuring you to act quickly, unusually high interest rates and charging advance fees.
Comparing multiple online lenders before applying can help bring to light any nefarious terms that a lender may be presenting. It also allows you to take your time and think through which loan works best for you. Don’t sign any loan paperwork until you’ve thoroughly reviewed the lender’s reputation and the loan terms.
Estimated Application Timelines
Typically, online loan applications are filled out and approved more quickly than applying for a loan in person. With online applications, the approval process may only take a few days, and some loans are approved as quickly as one business day.
When applying in person, the timeline may be a bit longer. Depending on the specifics of the lender, it can take a week or more to get approved. You’ll need to physically prepare all your documents, go to the bank, spend time meeting with the loan officer and then wait for loan approval. On top of this, some lenders require an appointment, which can add days or weeks to the whole process.
The Bottom Line
Consider whether an online or in-person application is best for your personal situation. The good news is that there isn’t a right or wrong answer. Online applications can offer quick approval and can be filled out at any time, while in-person applications provide more personalized guidance.
If you’re getting ready to apply for a loan, consider what you need from your application experience before deciding if you’ll apply online or in person.
Frequently Asked Questions About Online vs. In-Person Loans
Applying for a mortgage online or in person largely depends on your financial situation. Online loans may come with better terms, which can mean lower interest rates and fees. However, applying online for a mortgage does mean there’s less personalized help available. If your financial situation is complex, applying in person could be a better option.
Typically, applying for a car loan online is a better option than getting a loan from the dealership. Car dealership loans often come with higher interest rates and include extra markups. Since you can compare multiple different quotes and lenders online, you’ll likely have more options to find more favorable terms.
Credit score requirements depend on the loan and the lender. A good credit score usually results in better rates and loan terms. The minimum credit score for many personal loans is 600. However, some lenders will still work with you if you have a lower credit score.
Each online lender has its own specific requirements when applying. Typically, you’ll need to include proof of identification, your address, your Social Security number and proof of income. The lender may also ask about other debts and why you need the loan.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
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