Credit Union Personal Loans: Compare the Best Options

Credit union personal loans offer some of the best rates, fees, and terms out there, especially when compared to a personal loan from a bank. Their not-for-profit business structure grants them flexibility when it comes to lending to members.

We’ll dive into how credit union loans work, make some recommendations for credit unions, and walk you through the process of getting a personal loan from a credit union.

Why consider credit union personal loans?

Though banks and credit unions provide similar financial products, including personal loans, auto loans, and mortgages, there are some key differences.

Credit union	Bank
Not for profit	For profit
Credit union membership usually required	Generally do not limit customers to specific individuals based on location, organizational membership, employer, or other factors
Rates capped at 18% due to the Federal Credit Union Act	Rates can reach 30%+ for low credit score borrowers
Typically local in nature, meaning fewer branches and ATMs available	Convenient locations with more branches and ATMs available
May have less robust tech compared to national banks and online lenders	Typically have robust technology for customers, such as mobile apps and online banking
Looser eligibility requirements—if you have a lower credit score, you may qualify for a personal loan from a credit union you’re a member of	Banks and online lenders tend to have more strict eligibility requirements with minimum credit score and income requirements to qualify for approval and the best rates

The best credit unions for personal loans

Below are a few of the best credit unions for personal loans to get you started. We’ve compiled the information to help you make a decision that works best for your situation. 

PenFed Credit Union

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LendEDU editorial rating: 4.9/5

• Easy membership requirements—no military status required
• Loans up to $50,000
• Soft credit check doesn’t affect your credit score

PenFed Credit Union doesn’t restrict membership to anyone, which has helped it become the second largest credit union in the United States. The credit union offers a robust catalog of financial products, including checking, savings, credit cards, auto loans, mortgages, and personal loans. 

You can prequalify for a personal loan from PenFed without a hard credit check. After seeing your loan options, you can apply for membership. Your credit report will then be formally pulled. 

• Rates: As low as 7.99%
• Loan amounts: Up to $50,000
• Terms: Up to 5 years
• Origination fees: $0
• Soft credit check: Yes, doesn’t affect your credit score

Navy Federal Credit Union

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LendEDU editorial rating: 4.6/5

• No origination or prepayment fees
• Serves military families
• Same-day funding

Navy Federal Credit Union offers personal loans to members of the military, their families, and Department of Defense (DoD) contractors. Rates are very competitive. For loan terms under 36 months, APRs range from 7.99% to 18.0%.

For a personal loan, there are no origination fees. Loans can be as large as $50,000 or as low as $250, depending on what you need and qualify for. A savings account with at least $5 is required for ongoing membership. 

To apply, you’ll need to submit information about the loan amount and term, employment and income, and contact information for you and a co-applicant. 

• Rates: 7.99% to 18.00%
• Loan amounts: $250 to $50,000
• Terms: Up to 5 years
• Origination fee: $0
• Soft credit check: No

Alliant Credit Union

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• Quick approval
• Same day funds
• Up to $100,000 loan

Alliant Credit Union offers online personal loans with quick approval and funding. Terms range from one to five years with loan amounts from $1,000 to $100,000. There are no origination fees.

With Alliant, you can apply as a new member, meaning you’re able to become a member after receiving a loan decision. You’ll need your social security number, gross monthly income, and employment information to start the application. 

• Rates: From 11.79%
• Loan amounts: $1,000 to $100,000
• Terms: 1 to 5 years
• Origination fee: $0
• Soft credit check: Yes, doesn’t affect your credit score

Service Credit Union 

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• 0.75% APR discount for active duty military
• Robust online banking and mobile platforms
• Many ways to become a member

Service Credit Union loans offer competitive rates and terms on loans up to $50,000. Service Credit Union also offers personal lines of credit if you need some flexibility. 

To qualify for a personal loan from Service Credit Union, you need to be part of one of the following groups: military family, DoD contractors, or select employer groups. You can also become a member of the American Consumer Council or Financial Fitness Association to qualify for membership at Service Credit Union. 

• Rates: From 11.24% 
• Loan amounts: Up to $50,000
• Terms: 1 to 5 years
• Fees: N/A
• Soft credit check: No

Connexus Credit Union

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• Low rates
• Secured and unsecured personal loans available
• Discounts for digital banking and e-statement customers

Connexus offers very competitive APRs. A secured personal could have an APR as low as 6.24%. Unsecured personal loans have APRs as low as 9.74%. You can apply with your information online. 

To become a member of Connexus Credit Union, you need to be associated with a select number of groups or employers. You also must live in certain areas in Wisconsin, Minnesota, Ohio, and Illinois to become a member of Connexus Credit Union. 

You can also donate to the Connexus Association, a nonprofit that offers scholarships, grants, and financial education resources. 

• Rates: From 9.74% to 18.49% on unsecured personal loans
• Loan amounts: $1,000 to $50,000
• Terms: 2 to 7 years
• Fees: $0 origination
• Soft credit check: No

Credit union personal loan requirements

Credit unions will evaluate your creditworthiness just as a bank would. They’re going to look at your:

• Credit report
• Credit score
• Income
• Debt-to-income ratio
• Available cash

At the same time, many credit unions avoid setting specific requirements when it comes to credit scores and income. Instead, credit unions typically consider the big picture of your overall financial situation wealth, and the risk associated with lending. 

As such, borrowers who aren’t eligible for loans with other banks or online lenders may be able to secure a loan with their credit union.

In some cases, borrowers may be able to secure low rates compared to what they’d receive with other lenders. This is particularly true when it comes to borrowers with average or below-average credit, as many credit unions cap their annual percentage rates at about 18%. Credit unions also are less likely to charge origination fees or prepayment penalties.

How to get a personal loan from a credit union

To get a personal loan from a credit union, you’ll usually need to find a credit union where you’re eligible to become a member before selecting a loan. The process looks a little something like this:

1. Check the requirements for membership. See if it’s possible for you to become a member of a credit union that offers great products. A membership in a credit union can require you to be a member of a second group, such as the Financial Fitness Association (FFA). 
2. Find a loan that suits your needs. Take a look at your needs and decide how much you want to borrow and where you need your payment to be. Find what terms would work with what you need. 
3. Pre-qualify for a loan, if possible. Some credit unions allow you to check your rate, approved loan amount, and term with a soft credit check. This means the lender can pre-qualify you for a loan without a hard inquiry on your credit report. 
4. Formally apply for a personal loan. You’ll submit an application with personal details, employment, and financial information. The credit union will also take a look at your credit report. You’ll likely be required to submit documentation supporting your application.
5. Receive your money. Many credit unions advertise quick turnaround times for funding. You could receive your loan within 24 hours. 

Pros and cons of credit union personal loans

To summarize the pros and cons of credit union personal loans:

Pros

• Great rates and fees.

  APRs are often lower than what you can get from a bank. They’re capped on the higher end at 18%, so if you’re a low credit score borrower, this might be a great option to explore. 

• Individualized nature of the loan application process.

  Since credit unions only work with members, you’ll be more than just another account in their system. The institution will be more familiar with your financial situation and may be able to work with you more closely to meet your needs.

• Relaxed requirements.

  If you have no credit or a low credit score, you may have a better chance of being approved for a personal loan from a credit union.

Cons

• Membership-only model may exclude some.

  You may not be eligible for membership at many credit unions. There are a lot of roundabout ways to become a member (such as first becoming a member of the Financial Fitness Association). You also may need to open and maintain a checking or savings account to be eligible for membership

• Limited online credit union options.

  When you’re looking to get a personal loan online, credit unions have a fairly limited presence. There are a few big players but most others are small, regional operations.

• Lower loan limits.

  Because credit unions are usually smaller organizations compared to national or regional banks, they often take more measures to protect themselves in the case of default. This includes lower loan limits and, sometimes, required collateral in the form of a car, home equity, or other types of property. That’s what’s known as a secured loan.

• Few credit unions offer soft credit pulls.

  Although many banks and online lenders use soft credit pulls to provide rate quotes, this is not always the case with credit unions, so it’s important to keep this in mind before submitting an application. Too many hard credit inquiries can negatively impact your score. 

Alternatives to credit union personal loans

If you’re looking for a personal loan but don’t want to go through a credit union, you can turn to a traditional bank. Other options include:

Online lenders

Many of the best personal loan companies offer quick funding—in some cases, as soon as the same business day—and flexible repayment plans. In addition, there are online installment loans for borrowers who have poor credit or are otherwise unable to secure a loan through a credit union or bank. 

However, keep in mind many online lenders charge higher rates and additional fees, particularly for subprime borrowers.

Credit cards

In some cases, the right credit card can replace a personal loan. This is particularly true for borrowers with good or excellent credit who can take advantage of a 0% introductory APR offer.

FAQ

Can you qualify for a credit union personal loan with bad credit?

Credit unions may have more flexibility when it comes to taking on borrowers with poor credit, so it pays to shop around and see what a credit union can offer.  

Can you use a personal loan from a credit union for debt consolidation?

Yes, it is possible to use a personal loan from a credit union for debt consolidation. 

What kind of fees can you expect with credit union personal loans?

Fees will vary from credit union to credit union, but most don’t charge an origination fee for their personal loans. On the whole, credit unions charge lower fees than banks, according to data compiled by the National Credit Union Administration.

Can you get a cosigner for a credit union personal loan?

Many credit unions allow for a cosigner on a personal loan, which can help the primary borrower qualify for the loan. 

How do credit union personal loans affect your credit score?

A personal loan from a credit union affects your credit the same way any other loan would affect your credit score. On-time payments on an installment loan like a personal loan reflect positively on a credit report. Delinquent payments can drag your credit score down. 

Can you get a personal loan from a credit union without a checking account?

Credit unions require membership, but the requirements can vary, depending on the credit union. But yes, it is possible to get a credit union loan without a checking account.