Online vs. Phone Loan Applications: Which Option Is Right for You?

Applying online, over the phone or in person each offers a completely different experience. With an online application, you can easily check out lenders, test eligibility and apply from the comfort of your home. However, walking into a bank or credit union can still offer benefits like existing-relationship perks, security and personalized guidance. Let’s take a look at how these application methods compare when you're deciding which one is best for you.

Phone vs. In-Person Loan Applications: Which Option Is Right for You?

Apply by Phone for Speed and Flexibility

Applying for loans online makes sense when you want to handle the process yourself, compare several lenders and avoid working around bank opening hours. You can complete the application from a computer or phone, upload supporting documents and check its status without visiting a branch.

Instead of visiting three banks to ask about their personal loan rates, you can check prequalification offers from several lenders online through a soft inquiry, which doesn’t affect your credit score. You may see the estimated APR, monthly payment, loan amount and repayment period before deciding which lender deserves a formal application.

Applying for loans by phone may suit you if:

• You have a busy work schedule and can't visit a bank during business hours.
• You want to compare offers from online lenders, banks and credit unions without traveling between locations.
• You're comfortable uploading documents and entering personal information online.
• You want to check your potential rate through prequalification.
• You need a relatively quick approval and funding process.

Many online lenders use automated systems to review applications, verify information and make lending decisions. Some provide decisions within minutes, although additional verification can take longer. Once you accept an offer and complete the required steps, funds may arrive the same day or within a few business days.

Check the Lender Before Sharing Your Details

A genuine online lender can be just as good at protecting your data as any traditional bank. The key difference is in the lender's security and credibility rather than whether or not they have a branch.

Before applying for loans by phone, check that:

• The lender has a secure website and a clear privacy policy explaining how it collects and uses your information.
• It is licensed to lend in your state.
• Its website provides working customer service contact details.
• It looks at your credit history and your ability to repay rather than promising you'll be approved.

Visit a Bank or Credit Union for Personal Support

Sometimes, a conversation across a desk is more reassuring than a series of website pages and phone calls. You can bring your documents, discuss your financial situation and ask questions as they come up. A loan officer can explain unfamiliar terms, point out fees and help you understand how different repayment periods affect your monthly payments.

If you have maintained a checking or savings account with a bank or a membership with a credit union for several years, it may already have some information about your account activity and financial history. Some institutions offer existing customers rate discounts, special loan programs or more individual attention.

An in-person application may suit you if:

• You feel more comfortable discussing financial matters face-to-face.
• You want a loan officer to walk you through the application.
• You already have a good relationship with a local bank or credit union.
• You aren't comfortable submitting sensitive financial information online.

Branches operate during set business hours and you may need to schedule an appointment. If the lender asks for additional paperwork, you might have to make another visit. You also have fewer lenders to choose from if you limit your search to institutions with nearby branches. Plus, visiting a branch doesn't mean you'll receive a faster decision.

Conclusion

If anything in the offer is unclear, then ask the lender to explain it before you accept. You can apply online, speak to a representative or visit a branch, but don't be rushed into a commitment you haven't properly reviewed. Compare APR, fees, the amount you'll actually receive, monthly payment and the total amount you'll repay across the lenders. Then select a loan that is right for you and doesn't make your normal outgoings any harder to manage.