Best Banks for Personal Loans in January 2025

A personal loan from a bank can have perks that loans from other lenders don't. These include low interest rates, personalized service, and easy access to other banking services. But there can be drawbacks as well. Banks tend to prefer borrowers with high credit scores, and approval and funding times could take longer compared to online lenders.

SoFi is our top pick because the online bank has a great reputation for customer service and offers perks like free financial advice for members. Discover is another great option for low rates and no origination fees.

We'll cover how these different financial institutions compare and how to apply for a bank loan.

Best personal loans from banks

Credible partners with three of the best banks offering personal loans:

Other banks that offer personal loans

Methodology

Credible evaluated the best banks that offer personal loans based on factors such as customer experience, minimum and maximum fixed rates, minimum and maximum loan amounts, funding time, credit score and income requirements, loan terms, origination fees, discounts, nationwide availability, and whether cosigners are accepted. To assign star ratings, we used the following metrics and weightings:

• Rates and fees: 18%
• Loan terms: 18%
• Customer experience: 17%
• Eligibility: 14%
• Customer satisfaction: 10%
• Efficiency: 10%
• Options for poor credit and no credit: 9%
• Discounts: 4%

We chose only lenders that are FDIC-insured institutions and excluded both credit unions and non-bank, online-only lenders. Credible's team of experts gathered information from each lender's website, customer service department, in-house resources, and via email support. Each data point was verified by a senior editor to make sure it was accurate at the time of publication.

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

What is a bank loan, and how does one work?

Banks may offer different types of loans, including mortgages, small business loans, auto loans, and personal loans. A personal loan provides a lump sum of cash that you repay in predictable monthly installments over a period lasting one to seven years (available repayment terms depend on the bank and your loan amount). You can use a personal loan for many purposes, including debt consolidation, home improvement, or medical bills.

Most personal loans are unsecured, which means you don't have to offer a valuable asset like your home or vehicle as collateral. Banks approve borrowers for personal loans based on their credit score, income, and other financial factors. If you fail to repay a personal loan, the bank can't seize your property, but it can still report late payments to the credit bureaus or sue you to collect what you owe.

Related: How Do Personal Loans Work?

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 12.03% for a three-year personal loan, while credit unions charge 10.80% on average, according to the National Credit Union Administration (NCUA). Rates or credit union loans are currently capped at 18%, while maximum bank loan rates may range higher.

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.

Explore: Best Banks for Personal Loans

Bank loans vs. online lenders

Online-only lenders and fintechs don't have branch locations like a traditional bank, so you typically 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.

In part, this is because they tend to use artificial intelligence (AI) to evaluate borrowers based on a wide array of financial information instead of a manual underwriting process. This method could make it easier to qualify for a loan from an online lender than a bank if you don't have good or excellent credit and could speed up the approval and funding time. Certain online lenders, like Upstart, even consider borrowers with poor credit or no credit history.

However, online lenders typically partner with third-party banks, such as WebBank; most do not make loans themselves.

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 cater to borrowers with low credit scores or limited credit histories. 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.
• 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%. To calculate your DTI, add your monthly debt payments and divide the total by your monthly income before taxes and deductions.
• Income: Your lender may have a minimum income requirement. 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?

Tips on comparing personal loans from banks

As you review personal loan options, here are criteria to consider:

• APR: A loan's annual percentage rate (APR) reflects total annual borrowing costs. It accounts for both the interest rate and upfront fees such as origination fees, and it's a better measure for comparing loan costs than interest rates alone. Rates can range from around 7% to 36% for personal loans.
• Loan amounts: Some banks offer personal loans up to $100,000, while others cap loan amounts at $50,000 or less. Some banks, such as U.S. Bank, set lower limits for borrowers who aren't existing customers.
• Repayment terms: Your loan's repayment term determines how long you have to pay off your debt. Generally, repayments will range from one to seven years. A shorter repayment term typically helps you save money on interest, while a longer repayment term offers lower monthly payments.
• Fees: You may have to pay personal loan fees, such as an origination fee, upfront. While many banks charge origination fees, some do not. Also, other fees like late payment and insufficient funds fees should be considered.
• Discounts: Some lenders offer rate discounts if you set up automatic payments or allow the lender to pay your creditors directly. Existing customers may also qualify for a relationship discount with some banks. These discounts can help you save on interest throughout the life of the loan.
• Cosigner and co-borrower options: Some banks allow joint applications. That means you can apply with a co-borrower, someone with good credit who guarantees the loan, to potentially improve your odds of approval or get a lower rate. Keep in mind that a co-borrower also has access to the loan funds. Some lenders also allow you to apply with a cosigner, which is someone who guarantees repayment without sharing the funds.
• Time to fund: If you need your money quickly, go with a lender that disburses funds fast. Personal loan funding times are typically less than a week, but some lenders can fund your personal loan the same day you apply.

Related: How To Compare Personal Loans

How to get a personal loan from a bank

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

1. Review your options: Many banks offer an online prequalification tool you can use to compare estimated rates and terms. With some banks, you'll also have the option to meet with a loan officer in person and discuss your options. If you have a choice between a few different repayment terms, choose the shortest one that has a monthly payment you can comfortably afford.
2. 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 may be asked for supplemental documentation to prove your employment or identity.
3. 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 Credit: 10 Easy Strategies

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 12.32% compared to an average rate of 21.47% 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.
• 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. That 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 hard credit inquiries: A hard credit inquiry can lower your credit score by up to five 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?

Read More:

• The Best Ways to Borrow Money
• Best Personal Loans for Fair Credit
• Best Personal Loans for Good Credit
• Best Personal Loans for Excellent Credit
• What Are Personal Loans Used For?
• What Can't You Use a Personal Loan For?
• Does Applying for a Loan Hurt Your Credit Score?
• How Does a Personal Loan Affect Your Credit Score?