Online Loans vs. In-Person Loans: Pros and Cons

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Updated on March 26, 2023 by
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Are you in need of financing for an upcoming expense or project? If so, then you may be wondering about the best way to get the funding you need: applying for a loan online or in person. Here’s what you should know about online loans and in-person loans:

How does an in-person loan work?

Applying for a loan in person is the more traditional way to borrow money. Typically, the applicant would go to a lender (such as a bank or a credit union) and request to take out a loan. After filling out an application, the lender will review the applicant’s credentials and perform a credit check to determine their creditworthiness.

Depending on the type of loan, applicants may have to wait several days for their loan application to go through the underwriting process and be approved. There may also be a waiting period before they’re able to receive the funds they seek.

How does an online loan work?

An online loan is a type of loan option where the applicant applies with a lender over the internet. From the comfort and security of their own home, they can browse their options and choose the type of loan they want.

Because this process takes place online, applicants often know right away whether they’ve been approved for the loan. Many lenders will also make the funds available either the same day or the next business day.

Pros and cons of online and in-person loans

When trying to decide between applying for a loan in person or online, keep the following points in mind:


Applying for an online loan can be much more convenient than in person. Instead of having to go to a bank or lender, all you have to do is open your computer or use your smartphone to fill out the application.


Some in-person loans will require that the applicant offers collateral to secure the loan. Collateral is anything of value, such as a vehicle or boat, that the lender can legally seize if the applicant defaults on their repayments.

Since many online loans are unsecured, they don’t require you to provide collateral. This can be a huge advantage for people who may not have any sizeable collateral to offer.


Many traditional in-person loans take more time to process. This means it may take you a few days or even weeks to receive the cash you need.

With many online loans, the process will be much faster. Generally, many online lenders use algorithms to analyze the applicant’s information and determine if the loan should be approved. This significantly cuts down the processing time and leads to a faster distribution of funds.

Loan amount

Online loans can be limited as to how much they can offer an applicant. For larger loans, applicants may need to apply in person and offer collateral.


Some traditional in-person lenders only work with applicants who have a good credit rating or better. Online lenders, on the other hand, are more willing to approve applicants with any credit score and those who have had financial troubles in the past.

The bottom line

When deciding between applying for a loan online or in person, the decision will ultimately come down to your needs and comfort level. Applying over a computer will often be faster and more convenient, but this option may not be for everybody. Likewise, applying for a loan in person may feel more natural, but will likely be slower and less flexible. In the end, borrowers should go with the option that they feel is the best for their situation.

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