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If you need to borrow money for a personal expense, a credit union personal loan might be a good choice.
Because credit unions are nonprofit organizations, they sometimes offer lower interest rates compared to banks, which could save you money over the life of your loan.
Here’s what you should know about getting a personal loan from a credit union:
- 6 credit union loans to consider
- How to get a credit union personal loan
- How to qualify for a credit union personal loan
- Credit union loans pros and cons
- Payday loan alternatives
- Credit unions vs. online lenders
6 credit union loans to consider
Unlike banks and online lenders, credit unions tend to be smaller, local organizations.
This means it’s usually a good idea to start your search for a credit union in your own geographic area – though there are also some nationwide credit unions that you might qualify with, too.
Here are six credit unions that offer personal loans. Note that PenFed is a Credible partner while the other credit unions listed are not.
| Credit union | Rates | Loan terms | Loan amounts |
|---|---|---|---|
| Alliant Credit Union | Check with lender | 1 to 5 years | $1,000 to $50,000 |
| Boeing Employees’ Credit Union | Check with lender | Up to 6 years | $2,501 to $15,000 (loans under $2,500 available for financial hardship) |
| First Tech Federal Credit Union | Check with lender | 2 to 7 years | $500 to $50,000 |
| Navy Federal Credit Union | Check with lender | 37 months to 5 years (up to 15 years for home improvement loans) | $250 to $50,000 |
| PenFed Credit Union | 7.74% - 17.99% APR | 1 to 5 years | $600 to $50,000 (depending on loan term) |
| Teachers Federal Credit Union | Check with lender | 2 to 5 years | Up to $35,000 |
How to get a credit union personal loan
Getting a personal loan from a credit union is a little different than with other types of lenders, mainly because you’ll need to become a member of the credit union to potentially qualify for a loan.
If you’re ready to get a personal loan from a credit union, follow these four steps:
- Shop around and compare credit unions. Be sure to research which credit unions you’re eligible to join. After making a sizable list, compare interest rates, repayment terms, and any fees charged by the credit unions to find the right loan for you.
- Pick your loan option. Once you’ve compared credit unions, choose the loan option that best suits your needs.
- Fill out the application. When you’re ready to apply, you’ll need to complete a full application and submit any required documentation, such as tax returns or pay stubs.
- Get your loan funds. If you’re approved, the credit union will have you sign for the loan so it can send the funds to you. The time to fund for credit union loans is typically one to seven business days, depending on the lender.
It’s also important to also consider how much the loan will cost you over time. You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
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How to qualify for a credit union personal loan
All personal loan lenders have their own requirements to qualify for a loan. However, there are some common criteria that you’ll likely come across if you’re looking for a credit union personal loan. For example, you’ll generally need:
- Good to excellent credit (generally a score of 700 or higher)
- Low debt-to-income ratio
- Stable income and employment history
- Eligibility to become a member of the credit union
However, if you’re struggling to get approved for a credit union personal loan, another option is adding a cosigner to your application. Not all credit unions allow cosigners on personal loans, but some do.
Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
Learn More: Where to Get a Personal Loan
Credit union loans pros and cons
Here are a few pros and cons to consider before taking out a credit union loan.
Pros
- Lower rates: As of December 2020, the average interest rate on a credit union personal loan was 9.09% compared to the average 10.24% for bank loans.
- Community-focused: Credit unions are nonprofit organizations that serve specific areas of a community. Because of this, you might find a better customer experience and superior products at a credit union as opposed to a bank or online lender.
Cons
- Have to become a member: Credit unions are required by law to restrict their membership to specific categories — this is known as a field of membership. In many cases, a credit union’s field of membership extends to people who live in a certain area, work in a specified career, or join an associated nonprofit group. To take out a loan with a credit union, you’ll need to qualify for membership.
- Limited availability: Since credit unions have membership criteria, they’re not always available nationwide. While some are available nationwide, many are small, local financial institutions that you might not be eligible to join.
Check Out: Debt Consolidation Loans
Payday loan alternatives
Some credit unions offer payday alternative loans (PALs), which are typically small loans with short terms designed to tide you over to your next paycheck.
However, while PALs serve a similar purpose to payday loans, they’re much more affordable and come without predatory lending practices.
In general, PALs range from $200 to $2,000 with terms from one to 12 months, depending on the credit union. Keep in mind that in some cases, you’ll also need to have been a member of the credit union for a certain amount of time before you can apply for a PAL.
Here’s how a PAL compares to a typical payday loan:
| Payday alternative loan (PAL) | Payday loan | |
| Average interest rate | Up to 28% APR | 300% to 500% APR (can be higher depending on the lender) |
| Loan amount | $200 to $2,000 (depending on loan type) | Typically $50 to $1,000 |
| Min. credit score | Depends on credit union | N/A |
| Time to fund | Depends on credit union | Same day |
Learn More: Credit Card Consolidation Loans
Credit unions vs. online lenders
If you’re looking for a personal loan, it’s important to compare not only credit unions but also other types of lenders, including online lenders.
Here are several important points to keep in mind while considering personal loans from credit unions vs. online lenders:
| Credit unions | Online lenders | |
|---|---|---|
| Time to fund | As soon as the same day (depending on the lender) | As soon as the same day (depending on the lender) |
| Where to find them | Often local but sometimes available nationwide | Typically nationwide |
| Discounts | Might offer autopay discounts | Might offer autopay or loyalty discounts |
| Membership | Must be a member of the credit union to apply Eligibility might be based on:
| No membership requirement |
If you decide to get a personal loan, remember to compare as many lenders as you can to find a loan that suits your needs. Credible makes this easy — you can compare your prequalified rates from our partner lenders below in two minutes.
