Personal loans are available from three main sources: online lenders, credit unions, and banks. Each option has distinct advantages and considerations for borrowers.

Online Lenders

• Fastest approval and funding (often same or next business day)
• Easy comparison shopping through pre-qualification
• Convenient online application process
• Higher APRs for lower credit scores
• No in-person support

Credit Unions

• Lower APRs (federally chartered credit unions cap at 18%)
• More flexible lending criteria
• Smaller loan amounts available (starting from $250)
• Membership required
• Consider member history during approval

Banks

• Competitive rates for existing customers
• Larger loan amounts
• In-person support available
• Usually require good credit
• May need existing account relationship

Key Factors When Choosing a Lender:

• Annual Percentage Rate (APR)
• Loan terms (typically 2-7 years)
• Monthly payment amount
• Additional features (payment flexibility, direct creditor payments)

Types of Loans to Avoid:

• Payday loans (APRs near 400%)
• High-interest installment loans (rates above 36%)
• Short-term loans with excessive fees

Best Practices:

• Pre-qualify with multiple lenders to compare offers
• Consider total cost including fees and interest
• Choose loan terms that fit your budget
• Review all lender requirements before applying
• Check for early repayment penalties

The best personal loan source depends on your credit profile, desired loan amount, and preferred banking relationship. Online lenders offer convenience, credit unions provide competitive rates, and banks cater to existing customers with strong credit profiles.

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