Best Banks For Personal Loans in 2024

What is a bank loan?

A bank loan is an unsecured personal loan from a bank that you pay back in fixed, monthly installments. These loans come in a wide range of amounts — from $1,000 to $50,000, though some banks may lend up to $100,000 — and repayment terms of two to seven years.

Rates for personal loans from banks can start as low as 6%. Some banks require you to be an existing customer and offer perks for account holders, but not all.

» MORE: How do personal loans from banks work?

You can use a bank loan for almost anything. Here are some popular reasons to get a personal loan:

• Consolidating high-interest debt.

• Renovating your home.

• Covering emergency expenses.

• Paying for a large expense like a move or wedding.

How to get a loan from the bank

1. Check the bank’s loan criteria. Before you apply for a loan, familiarize yourself with the application requirements on the bank’s website or give the branch a call. 

2. Pre-qualify, if possible. Some banks offer pre-qualification for a personal loan, which lets you check loan options without hurting your credit score. Pre-qualification is quick — complete a short application, undergo a soft credit pull and view your potential loan offers. 

3. Submit your application. When you’re ready, submit a formal loan application. Required documents typically include proof of income and employment. You’ll also undergo a hard credit inquiry during this step, which temporarily knocks a few points off your score. 

4. Get approved and funded. Approval can be instantaneous or take a few days, depending on the bank and if additional documentation is needed. Once approved, you’ll receive the loan documents, usually electronically, which you’ll sign and return to the lender. Funding time varies, but can be as early as same-day or up to a week. 

5. Make a plan to pay back the loan. Once you receive the loan funds, it’s important to make a plan to manage your monthly payments, so you don’t fall behind, which can hurt your credit and result in late fees. 

» MORE: How to apply for a bank loan in 5 steps

Not every bank offers personal loans. Some, like American Express, offer personal loans only to current customers who are pre-approved. Other major banks, like Bank of America, Chase and Capital One, don’t currently offer personal loans at all.

If you’re unsure whether your bank offers personal loans, call and ask about their personal lending options. Even if the bank doesn’t offer a personal loan, they may be able to provide other types of financing that fit your needs, including credit cards or lines of credit.

» MORE: Personal loan vs. line of credit: How to choose

Bank personal loan rates

The average interest rate on a two-year personal loan from a bank is 12.49%, according to the most current data from the Federal Reserve.

As with most credit products, the annual percentage rate you receive on a personal loan — which includes interest and any fees — depends a lot on your credit score. The better your score, the lower your rate and the less interest you’ll pay over the life of the loan.

The interest rate also affects your total monthly payment, as does the term length. A longer-term means lower monthly payments, but you pay more interest over time.

Use our personal loan calculator to estimate interest and monthly payments on a personal loan, based on your credit score.

» MORE: Best personal loan interest rates

Pros and cons of bank loans

While personal loans from banks are often structured similarly to online loans, getting and qualifying for one may be different. Here are a few pros and cons to consider:

Pros of bank loans

• Customer benefits. Banks typically offer lower interest rates, higher borrowing amounts and additional perks, like a rate discount, to existing account holders.

• Convenience. If you are an existing account holder, getting a personal loan at the same bank may make the process easier and help keep track of your money.

• Better assistance. Customer service may be more robust at banks, especially if you can visit a brick-and-mortar location. You may even have the same contact person throughout the life of the loan.

Cons of bank loans

• Limited pre-qualifying options. Not all banks offer the option to pre-qualify online, so you can't see your prospective rates and terms before applying and submitting to a hard credit check.

• Possible longer funding time. Funding can take longer compared to getting a loan from an online lender, though some banks offer same- or next-day funding. 

• May require going to a branch. Some banks may require an in-person visit to complete a loan application or receive funding.  

» MORE: Should you apply for a loan online or in person?

How to get a bank loan with bad credit

Bank loans may offer benefits for their customers, but they typically have higher credit score requirements than online loans.

Having an existing relationship at your bank may help your chances of qualifying, but getting approved often comes down to how you look on paper. Consider these tips for the best chance of getting a loan:

• Build your credit. At least a few years of credit history with on-time payments and no delinquencies will help your application. Avoid opening new accounts right before you apply (it can ding your credit) and check your credit report for errors that may be hurting your score. You can often dispute any errors online.

• Review your credit score. Many banks have a minimum credit score requirement, but a higher score gives you the best chance at a low rate. Get a free credit score with NerdWallet.

• Boost your income and pay down debt. Lowering the percentage of your income that goes to debts, also called your debt-to-income ratio, is viewed favorably by most lenders. In many cases, lenders want to see that you make enough income to cover your existing obligations, plus the loan you're applying for. The lower your DTI, the better.

• Increase your savings, if you can. Showing a lender that you've got enough money in the bank can boost their confidence that you'll make payments on time.

» MORE: 5 tips to boost your chances of personal loan approval

Alternatives to banks for personal loans

Whether you’re a loyal bank customer or not, it’s always smart to consider other sources for personal loans. No matter the lender, the best loan is the one with the lowest rate and payments that fit your budget.

Here are a few alternatives to getting a bank loan:

Credit unions: These not-for-profit, members-only organizations consider loan applicants’ full financial picture and some are more likely to approve borrowers with average credit (a 630 to 689 credit score) or bad credit (a 629 credit score or lower). Rates on loans at federal credit unions are capped at 18%.

Online loans: Lenders let you complete the entire loan process online and provide funding within a day or two. Unlike some banks, online lenders typically let you pre-qualify for financing to see your estimated rate. Since this only triggers a soft credit pull, you can check your rate and terms at several online lenders without impacting your credit score.

Home equity loans and HELOCs: This may be a lower-cost borrowing option if you have equity in your home, but you also risk losing it if you fail to repay the loan.

How to pre-qualify for an online personal loan