Do I Have to Get a Loan From a Bank?

Anelle Valdes
the front of a bank building

Many people who are trying to get a loan figure they need to go straight to the bank and apply there. But you don’t have to get a loan from a bank. In fact, depending on your situation, getting a loan somewhere else might actually be a better option. Find out more about the various options and lenders available to choose from below.

Loans from Banks

the words “bank loans” are on display on a tablet

What is it? Bank loans come from established, formal banks. You might apply for a loan online on the bank’s website or in person at a local branch.

Pros and cons: If you have a relationship with the bank, you may be able to walk in and get one-on-one help with the loan process. Banks may also have the resources to fund larger loans than some other providers can. On the flip side, banks have to follow many regulations, and they aren’t as dependent on the business of someone who only needs a small loan. That means that many aren’t as willing to work with you, and those that are may require you to have a higher credit score in order to qualify for a loan.

Who might it be right for? Bank loans might be the right choice for someone with good credit, a strong income and a need for a high loan amount.

Loans from Credit Unions

credit union paperwork

What is it? Loans from credit unions are basically the same as bank loans, except they come from your credit union.

Pros and cons: Credit unions are sometimes more willing to work with clients than larger banks are. However, you may still need decent credit to get a loan.

Who might it be right for? These loans might be an option for someone with decent credit and a strong relationship with their credit union.

Loans from Family

an elderly father gives money to his adult son

What is it? Loans from family or friends are exactly what they sound like. Someone you know who has the money might be willing to give it to you in exchange for a repayment plan.

Pros and cons: If you want to get a loan today, family with fast access to cash might be able to offer you the money quickly. And, depending on your agreement with them, you may not pay any interest or you might pay much lower interest than with another type of loan. The downside is that you owe your family member or friend money, and that can put a significant damper on the relationship if you’re not careful.

Who might it be right for? Someone who needs fast cash for an urgent matter and knows they can easily pay the money back in the short-term might turn to family for help.

Private Loans

a payday loan application displays on a tablet

What is it? A private loan is one that’s provided by a private lending firm or other entity. This includes bank loans, but private loans don’t have to come from a bank. You might be able to get a personal loan online or through a local lending company.

Pros and cons: Private personal loan companies may be willing to provide the types of loans banks are not willing to consider. That can include bad credit loans — which are loans for people with little or bad credit history. Private loan companies might also offer small, short-term loans that other lenders don’t care about dealing with.

Who might it be right for? This might be a good option if you have less-than-stellar credit, only need a relatively small amount of money or don’t care to deal with a bank.

Payday Loans

a payday loan application displays on a tablet

What is it? Payday loans are short-term, high-interest loans. Typically, they’re designed to be paid back within one or two paydays.

Pros and cons: The benefits of a traditional payday loan are that you don’t need good credit and you can typically get the money the same day. The downsides are that payday loans are not very flexible and can be difficult to pay back. Plus, payday lenders don’t usually report your on-time payments to the credit bureaus, so you don’t get any credit-building benefit from the process.

Who might it be right for? Traditional payday loans aren’t a great option for most people. If you can qualify for a payday loan, you can probably qualify for a fast cash online loan — even if you have bad credit.

Wise Loan

a loan agreement sits on a clipboard

What is it? Wise Loan offers a personal loan option. It’s a good alternative to payday loans as well as a potential option for anyone who is looking to get a loan fast. Loans can range as high as $2,000 depending on your need, the state you live in and other factors. You typically pay back the loan over up to 6 months.

Pros and cons: Wise Loan does report to the credit bureaus, which means you can start building or rebuilding your credit with this loan. Wise Loan is also a responsible lender, which means it won’t create loans that people will find impossible to pay. While you don’t need a good credit score to get approved for a Wise Loan, you do need to meet some minimum requirements to ensure you can pay the loan back.

Who might it be right for? A loan from Wise Loan might be right for you if you need fast cash to cover an immediate need. Applicants who apply before 5 p.m. are eligible to get their funds deposited the same day.

A Few Tips for Those Who Need to Get a Loan Now

a woman talks on a phone while working on a laptop

If you’re in an immediate financial need and need to get a loan fast, it’s easy to get caught up in that situation and become stressed out. But take a moment to breathe and consider your options. What you don’t want to do is start applying for every loan you see.

Each time you apply for a loan, a hard inquiry is placed on your credit report. Each inquiry can reduce your credit score by a small amount. Applying all over the place for a loan because you need the money now can cause your credit score to take a hit, making it even harder for you to get approved for the funds.

Instead, decide how much money you need. Then, review your credit report or score if possible. If you have an idea of what your credit is, you’ll be able to determine whether certain lenders are likely to approve your application.

Once you know where you stand, read up on lenders and loan options. Make a decision and apply for a loan that both meets your needs and that you’re fairly certain you can qualify for, thus cutting down on the number of hard inquiries you’re dealing with.

You can check the Wise Loan terms and loan options for the state you live in. Wise Loan offers funding in Delaware, Idaho, Illinois, Louisiana, Mississippi, Missouri, South Carolina, Texas, Utah and Wisconsin.

Apply for a Loan Now

a person fills out an application form

If you want to get a loan quickly, Wise Loan may be a good option. You can apply in under a few minutes and get an answer almost immediately. You may also qualify for instant funding, but if not, your money is typically in your account within one business day or even within 24 hours.

Wise Loan also offers some perks many lenders don’t, including a potential Nest Egg account. You can earn $1 to $5 for every $100 you repay on-time. On top of positive reporting to the credit bureaus, you get monetary rewards for managing your loan responsibly. Apply today!

The recommendations contained in this article are designed for informational purposes only.  Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.

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