Our guide to the best banks for personal loans
A bank loan is a personal loan you get from a national, regional or local bank, instead of an online lender or credit union. You can use a bank loan for almost anything, like consolidating high-interest debt, renovating your home or covering an emergency expense. Getting a personal loan from a bank can be beneficial if you can get a lower interest rate. Rates on bank loans tend to be lower than rates from online lenders.
Banks sometimes offer rate discounts and other perks, such as higher borrowing amounts or longer loan terms, to existing account holders. Some borrowers prefer bank loans for the ability to speak to a loan officer in person or the convenience of managing loan payments at the same financial institution where they bank.
Bank personal loan rates
The average interest rate on a two-year personal loan from a bank is 11.57%, 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 upfront fees — depends heavily 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 monthly payments and total interest on a personal loan, based on your loan amount, estimated rate and loan term. Estimated monthly payment
$309.92
Total interest over 3 years
$1,156.95
Total loan payment
$11,156.95
PRINCIPAL AMOUNT — $10,000TOTAL INTEREST PAID — $1,156.95
How to get a loan from the bank
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. 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. 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 can knock a few points off your score. Sign loan agreement and get funded. Loan approval can be instantaneous or take a couple 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. Once you receive the funds, make a plan to manage your monthly payment so you don’t fall behind, which can result in late fees and hurt your credit.
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 offer traditional 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.
How to get a bank loan with bad credit
Banks typically require borrowers to have good or excellent credit (a score in the mid-600s or higher), but having an existing relationship at your bank may help your chances of qualifying if your score is lower. Consider these tips for the best chance of getting a loan if you have bad credit (a score between 300 to high 500s):
Boost your income and pay down debt. Lowering your debt-to-income ratio, the percentage of your income that goes to debts, is viewed favorably by most lenders. A low DTI ratio shows lenders that you make enough income to cover your existing obligations, plus the loan you're applying for. Disclose all your income on your loan application — including money from employment, alimony, child support, Social Security or other sources. 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.
Add a co-signer or co-borrower. If your lender allows it, adding a co-applicant with a higher credit score or income can improve your chances of qualifying or getting a lower rate.
Use collateral to secure a loan. Banks tend to have looser credit requirements for secured personal loans, because they can use the collateral to recoup losses if the borrower defaults.
Small-dollar loans from banks
If you need to borrow $1,000 or less, some banks offer small-dollar loans that must be repaid within a few months. Here are some examples of small loans that national banks offer to their existing customers.
Bank of America’s Balance Assist: Customers with a Bank of America checking account can borrow up to $500 with a $5 flat fee. Loan payments are due in three monthly installments. U.S. Bank’s Simple Loan: Checking account customers can borrow up to $1,000 in $100 increments, with a $6 fee for every $100 borrowed. Borrowers must repay the loan over three monthly installments. Wells Fargo’s Flex Loan: This small-dollar loan is only available to pre-approved customers in the lender's mobile app. Borrowers can either get a $250 loan with a $12 fee or a $500 loan with a $20 fee. Loan payments are due in four monthly installments.
Alternative borrowing options
Whether you’re a loyal bank customer or not, it’s always smart to consider other sources for borrowing. The best loan is typically the one with the lowest rate and payments that fit your budget.
Here are a few alternatives to getting a bank loan:
Personal loans from credit unions: Credit unions often consider loan applicants’ full financial picture and some are more likely to approve borrowers with fair credit (mid-500s to low 600s) or bad credit (300 to high 500s). Rates on loans at federal credit unions are capped at 18%, but you typically must be a member to apply. Personal loans from online lenders: Online lenders tend to offer loans to borrowers across the credit spectrum. The application and funding process can be quicker than with bank loans, but rates for online loans may be higher and often include origination fees, which many banks don’t charge. Zero interest credit cards: You’ll generally need a good or excellent credit score to qualify for a credit card with a zero interest introductory rate. You’ll avoid paying interest if you pay off the balance before the no-interest period ends, typically the first 15 to 21 months. After that, the credit card balance will likely be subject to a double-digit interest rate. Cash advance apps: Cash advances let you essentially borrow a few hundred dollars from your next paycheck. They typically don’t require a credit check but can come with fees or requests for optional tips. Make sure you can afford to repay the advance with your next paycheck in addition to your other regular expenses. Buy now, pay later: Many major retailers offer “buy now, pay later” plans that let customers spread out the cost of an item over several weeks or a few months. One popular plan lets you break up an expense over four biweekly payments with no fees or hard credit inquiry. Since BNPL plans can be easy to get, using one could lead to overspending. Family loans: Asking a family member or friend for a loan may feel awkward, but it can help you avoid credit checks and high interest rates that may come with traditional loans. Draw up a loan agreement so both parties are on the same page about the repayment plan. 
