Step 2: Choose Where to Borrow

Five kinds of lenders, side by side

The name on the website does not tell you much. What matters is the charter or license the lender works under, because that decides the rate ceiling, the regulator and the protections you get. Use this table as a map, then read the section for the kind of lender you are considering.

Banks and credit unions

If you already have a checking account, start there. Your bank or credit union can see your deposits, which helps when your credit file is thin, and some take a little off the rate for customers. The Federal Reserve's consumer credit release of October 7, 2026 put the average commercial bank interest rate on a 24-month personal loan at 11.90% for August 2026 (preliminary). That is an average rate for bank borrowers, who tend to have strong credit, and it does not include fees.

Federal credit unions face a ceiling. The Federal Credit Union Act generally holds them to 15% a year, but it lets the NCUA Board set a higher temporary ceiling when market rates call for it. On February 6, 2026, the Board kept the ceiling at 18% and extended it to September 10, 2027. A state-chartered credit union follows its own charter rules, so ask what limit applies there.

Online lenders and bank partnerships

Online lenders come in two forms, and the difference changes the price ceiling. Some hold a lender license in each state where they lend and follow that state's rate cap. Others market and service loans that a partner bank actually makes. In that case the bank is the lender of record, and the rate can follow the law of the bank's home state rather than yours.

• Find the lender of record in the loan agreement and the Truth in Lending disclosure: it is the company named as the creditor.
• Compare it with the website's brand. If they differ, the brand is a marketer or servicer and the named creditor is the one that lends.
• Check your state's rules for licensed lenders on our state rules map, and see whether the offer goes above them.

A lead-generation site, including the request form on this one, is a third kind of business: it passes your request to lenders and brokers and does not lend. The offer, and the license behind it, comes from whoever contacts you.

CDFIs and finance companies

A community development financial institution, or CDFI, is a lender certified by the Treasury Department's CDFI Fund to serve low-income communities and people who lack access to financing. Some are banks or credit unions; others are nonprofit loan funds. If a bank has turned you down, a local CDFI loan fund is worth a call; the CDFI Fund publishes a list of certified institutions on its site.

Finance companies are the storefront and online installment lenders that hold a state consumer lender license. They lend to a wider range of applicants than most banks, and they may charge up to the state's limit, which in some states is well above 36% with fees included. Look up the cap for your state before you compare, and read the total cost, not only the payment.

What the rate band means in dollars

Here is the same $10,000 loan over 36 months at three rates: the bank average, a middle rate, and the federal credit union ceiling. These are worked examples with no fees, computed with the standard amortization formula; they are not offers.

Six points of rate add about $30 a month and more than $1,000 over three years. A fee taken out of the loan widens the gap; see net loan proceeds.

How to shortlist two or three lenders

1. 1 Ask your own bank or credit union first, and note any membership or account rules.
2. 2 Add one or two lenders of another kind, such as an online lender licensed in your state, so you have a comparison.
3. 3 Ask each lender whether it can show you a rate before a full application, and what kind of credit check each stage uses.
4. 4 Check each name against license records before you send any documents; verifying a lender is the next step.

If you are considering a payday or title loan because nothing else seems available, Lendmira, our sister site, compares alternatives to payday loans first.

Questions people ask