Securing a favorable loan rate can significantly impact your financial well-being. In this guide, we’ll cover essential steps to qualify for and apply for a bank loan, analyze how your credit score affects APR rates, and provide detailed comparisons of the top banks offering the best personal loan deals this year.
How to Qualify For and Apply for a Bank Loan
1. Determine Loan Purpose
Considerations: Define how you plan to use the loan. Some lenders have specific restrictions on personal loan proceeds.
2. Review Your Credit Report
Action: Check your credit score and report for any negative marks that could affect your loan application.
3. Assess Your Finances
Review: Ensure your income can cover the loan’s monthly payments without compromising your ability to manage other bills.
4. Compare Lenders
Comparison: Evaluate interest rates, fees, and credit requirements across multiple lenders to find the best option for you.
5. Choose a Lender
Decision: Select a lender that meets your needs, considering factors such as interest rates and borrowing limits.
6. Fill Out an Application
Requirements: Apply online with necessary documents, including tax returns, pay stubs, and your Social Security number.
7. Await Approval
Timeline: Loan approval can take from one day to a week, with most decisions being made quickly.
8. Receive Your Funds
Disbursement: Approved loans are typically disbursed via direct deposit, often within one to five business days.
Average APR by Credit Score
Table: Average APRs, Terms, and Loan Amounts
Credit Rating
Average APR
Average Term (Months)
Average Loan Amount
Excellent (720+)
21.23%
48
$17,674
Good (660-719)
26.01%
48
$13,770
Fair (620-659)
30.91%
49
$7,838
Poor (<620)
30.94%
44
$9,550
Comparing Bank Loans
When shopping for a personal loan, consider the following factors:
Credit Requirements
Factor: Minimum credit score needed for loan approval.
APR
Factor: The annual percentage rate, which affects the total cost of borrowing.
Fees
Factor: Be aware of any fees such as late payment fees or prepayment penalties.
Co-signers or Co-applicants
Factor: Check if the lender allows co-signers or co-applicants to improve your chances of approval.
Loan Restrictions
Factor: Understand any restrictions on how you can use the loan funds.
Availability
Factor: Ensure the lender operates in your area.
Best Overall: U.S. Bank
Loan Details
Loan Feature
Details
APR Range
8.74% – 24.99%
Loan Amount
$1,000 – $50,000
Loan Terms
12 months – 84 months
Why U.S. Bank Stands Out
Pros: No restrictions on loan use, 0.50% autopay discount, co-applicants allowed, possible same-day funding.
Cons: Limited to 26 states, no co-signers, fewer benefits for non-customers, $25 late payment fee.
Qualifications
Credit Score: Minimum 660; lowest APR requires a score of 800.
Customer Requirement: Best terms for existing U.S. Bank customers.
Company Overview
Background: Founded in 1863, headquartered in Minneapolis.
Key Takeaways
Ideal for borrowers with excellent credit seeking flexible loan use and competitive rates.
Best for Debt Consolidation: Discover
Loan Details
Loan Feature
Details
APR Range
7.99% – 24.99%
Loan Amount
$2,500 – $40,000
Loan Terms
36 months – 84 months
Why Discover Excels
Pros: Low minimum APR, few restrictions on loan use, excellent J.D. Power rating.
Cons: No interest rate discount, $39 late payment fee, no co-signers.
Qualifications
Credit Score: Minimum 660.
Additional Requirements: U.S. citizenship or permanent residency, minimum income of $25,000.
Company Overview
Background: Established in 1985, headquartered in Riverwoods, Illinois.
Key Takeaways
Best for consolidating credit card and other unsecured debts with low rates.
Best for Fast Funding: Citibank
Loan Details
Loan Feature
Details
APR Range
11.49% – 20.49%
Loan Amount
$2,000 – $30,000
Loan Terms
12 months – 60 months
Why Citibank is Top for Speed
Pros: Same-day funding for existing customers, no fees, 0.50% interest rate discount for autopay.
Cons: Low maximum loan amount, no co-signers, below-average J.D. Power rating.
Qualifications
Age: At least 18 years old (21 in Puerto Rico).
Company Overview
Background: Founded in 1812, headquartered in New York.
Key Takeaways
Ideal for borrowers needing quick access to funds.
Best for American Express Cardholders: American Express
Loan Details
Loan Feature
Details
APR Range
5.91% – 19.97%
Loan Amount
$3,500 – $40,000
Loan Terms
12 months – 60 months
Why American Express Leads
Pros: Low APR for top credit scores, no origination or prepayment fees, high customer satisfaction.
Cons: Must be an Amex cardholder, loan restrictions, low maximum amount.
Qualifications
Card Requirement: Must be an American Express consumer cardholder.
Company Overview
Background: Established in 1850, headquartered in New York.
Key Takeaways
Best for existing American Express cardholders seeking low rates and high satisfaction.
Best for Large Loan Amounts: Wells Fargo
Loan Details
Loan Feature
Details
APR Range
7.49% – 23.24%
Loan Amount
$3,000 – $100,000
Loan Terms
12 months – 84 months
Why Wells Fargo is the Top Choice
Pros: High maximum loan amount, same-day funding, no origination or prepayment fees.
Cons: Must be a customer for at least 12 months, no co-signers.
Qualifications
Customer Requirement: Must have a Wells Fargo account for at least 12 months.
Company Overview
Background: Founded in 1852, headquartered in San Francisco.
Key Takeaways
Best for borrowers needing large loan amounts with flexible terms.
Final Thoughts
Selecting the right bank for a personal loan involves weighing factors like APR, fees, loan amounts, and specific needs. Whether you’re an American Express cardholder, need fast funding, or require a large loan amount, there’s a bank that meets your requirements. Consider each bank’s strengths and drawbacks to find the best loan option for you.
