9 Places to Get a Loan When You Need to Borrow Money

Need money for a car, a college class, a mortgage, or just to get you through to your next paycheck? You’re not alone.

Currently, 43 million Americans have borrowed for a student loan. According to Zillow, 71 percent of homeowners have a mortgage. Loan amounts for new cars have risen to an all-time high, based on data from Experian.

Borrowing money can be a risky, lengthy, and emotional process. But knowing who to turn to can help you make the best decision to suit your financial needs. This comprehensive list includes the most popular places to get a loan and the pros and cons you should consider before signing on the bottom line.

9 places to get a loan

1. National banks

US Bank, Wells Fargo, Capital One — you’ve heard these names time and time again touting their personal loan programs. In fact, you may already be a member, making it even more attractive to borrow from a business you trust.

Why borrow: Big-name banks give you tons of options! From an array of terms (length), fees, incentives, and more, you’ll likely find a loan that works for you. In addition, brand-name banks are also set up for convenient features such as online bill pay and may have 24/7 customer service to assist you.

Why skip: A big name doesn’t mean big service. Working with national banks could make it difficult to get a real person on the phone, or you might end up talking to an inexperienced bank agent. These people may also not have the flexibility to grant exceptions or are required to follow strict rules about credit scores and borrower profiles.

2. Credit unions

Credit unions are becoming the popular alternatives to banks. Usually headquartered within the community they serve, it’s a great way to support local businesses and get some small-business benefits.

Why borrow: US News states that, on average, credit unions offer borrowers lower rates than banks. Another huge plus is location. Instead of having to call when there’s a question, you can always stop by your branch to sit down face-to-face with an expert.

Why skip: Want to pay online or check your payoff progress? It may not be an option with credit unions behind the technology curve.

3. Online lenders

A loan in your pajamas? It’s possible now that online banking is becoming the norm. However, there is much to be cautious about before taking the money.

Why borrow: It’s fast, easy, and you don’t need to do much more than put in your information and wait for approval. It’s also a good alternative if you have poor credit, as many of these lenders are set up to work with bad or no credit.

Why skip: Watch out for the scam! Some of these banks may charge insane interest rates. In a story by NPR, a reporter filled out a fake application for a small loan before discovering that a week-long $750 loan came with a 1,300% interest rate. Do your homework to ensure you’re working with a reputable lender.

4. Peer-to-Peer

One type of online lender that is making a name for itself is peer-to-peer lending. You apply for a loan and individuals, not banks, fund part or all of it. You pay interest and the balance back to them.

Why borrow: Rates for P2P loans are usually very reasonable and are attractive for a host of different borrowers. Terms are usually shorter as well, making it a great choice if you are looking for a loan you can pay off quickly and painlessly.

Why skip: The verdict is still out. Because it’s new to the game of lending, there are many questions on if it will last, how borrowers are found, and what happens with delinquencies. As of spring of 2016, the Consumer Financial Protection Bureau has started to take complaints from both lenders and borrowers who have used some of the top P2P banks.

5. Retirement plans

Have an employee-sponsored retirement plan? You may be eligible to take a loan out on your retirement savings. The IRS has limits on how much you borrow ($50,000 or half the balance, whichever is less), but it could be a good source of quick cash if you’re careful.

Why borrow: It’s technically already your money, and when you pay it back (usually within five years), you’ll be paying back interest to yourself. Interest rates are competitive and these loans are a good alternative if you can’t obtain a loan because of credit issues.

Why skip: It’s your retirement, and by removing some funds from your account, even temporarily, you won’t benefit from compound growth. That could set you back years from your retirement goal.

6. Cash advances

Let’s say you need your loan to handle an emergency that requires access to cash ASAP. In that case, you can take your credit card to the ATM, request a cash advance, and in seconds have access to real money.

Why borrow: It’s an efficient method when cash is the only thing that will do.

Why skip: Interest, interest, interest. Most credit cards charge outrageous interest along with fees and other hidden expenses to make your cash advance even more expensive.

7. Private businesses

Need a new couch or a car but don’t feel like taking time to go through the process at the bank? Today, businesses that sell big-ticket items can provide you with a loan for the purchase.

Why borrow: You’re already purchasing from them, so save the effort and get the loan on site. These lenders may also offer discounts on the price or no interest for extended periods of time.

Why skip: Shopping around for loans may show you that the effort is really worth it. Because these businesses are the middle man, you don’t get to see the competitor’s far better rate and terms. In addition, the person you’re dealing with is most likely not a loan expert, but a salesperson.

8. Payday lenders

Having limited credit history can mean your options are especially tight. When emergencies come up, you may be put in a desperate position. That’s where payday lenders come in. Using a cash advance on your pay stub, you can get a short-term loan for instant cash.

Why borrow: Limited options and serious emergencies requiring small amounts of money (usually under $1000) are the only reasons why you should consider payday lenders.

Why skip: Where payday lenders get you is in the outrageous fees and interest charged. The average loan term is two weeks with a 400 percent APR or more (paid in one lump sum at the end). Even small loans of only a few hundred dollars can add up to impossible amounts once large fees are tacked on.

9. Parents and friends

You may not be interested in calling in a loan from Bank of Mom and Dad, but for those who are in a jam, asking generous friends and family can be a solution with limited financial consequences.

Why borrow: The best loans from someone you know are ones that are written, documented, and charge some interest (even if it’s only half a percentage point). This protects both sides from potential misunderstandings, in addition to creating a more official, business feel to the deal.

Why skip: Family, friends, and money don’t mix — and for good reason. Failing to pay back loans can lead to resentment from a parent or friend, causing major drama that could hurt your relationships.

Loan choices that work for you

With the variety of options out there, you can find the best places to get a loan that fits your needs. When loan shopping, be sure to come prepared and ready to look for red flags such as high borrowing fees, large interest rates, and inflexibility by the lender. By investigating the best place to get a loan when you need money, you’ll have the security to borrow without fear.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Finance Lender Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
  2. Personal Loans: Fixed rates from 5.49% APR to 14.24% APR (with AutoPay). Variable rates from 5.29% APR to 11.44% APR (with AutoPay). SoFi rate ranges are current as of December 1, 2017 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.29% APR assumes current 1-month LIBOR rate of 1.34% plus 4.20% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate Disclosure: Fixed interest rates range from 5.99% – 16.24% (5.99% – 16.24% APR) based on applicable terms and presence of a co-applicant. Lowest rates shown are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Benefit: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.39% - 29.99%$1,000 - $50,000Visit Upstart
5.29% - 14.24%1$5,000 - $100,000Visit SoFi
8.00% - 25.00%$5,000 - $35,000Visit Payoff
5.99% - 16.24%2$5,000 - $50,000Visit Citizens
5.99% - 35.89%$1,000 - $40,000Visit LendingClub
5.25% - 14.24%$2,000 - $50,000Visit Earnest
Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.