Credit Union Personal Loans: Compare the Best Options
Credit unions are known as the customer-friendly alternative to an impersonal bank experience. In some cases, this service can help borrowers access personal loans with more affordable rates than what’s offered at traditional banks. But before committing to a credit union loan, you should shop around to find the best offer.
Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.
If you’re in the market for a personal loan, it’s likely you’ve considered a traditional bank or online lender. But for some borrowers, a credit union personal loan may be a more affordable or accessible option. This is particularly true if you’re an existing credit union member, though you can often become one at the time of application.
Though banks and credit unions provide similar financial products, including personal loans, auto loans, and mortgages, there are a few key differences:
- Credit unions are not-for-profit organizations, while banks are for-profit.
- Typically, you must be a credit union member to access lending products.
- Banks generally do not limit membership to specific individuals based on location, organizational membership, employer, or other factors.
- Credit unions are typically known for providing a more personal customer experience.
- Banks are frequently known to have more branches and ATMs.
This guide will walk you through how to get a loan from a credit union, as well as a few alternatives.
In this guide:
- Best Credit Unions for Personal Loans
- Benefits of Credit Union Loans
- Risks of Credit Union Loans
- Alternatives to Getting a Personal Loan from a Credit Union
Best Credit Unions for Personal Loans
Below are a few of the best credit unions for personal loans. Compare their rates to find the best option for your needs.
- Lower rates – Low starting APR with no application, origination, or prepayment fees
- Easy application process – borrowers can apply online, in person, or over the phone
- Available in all 50 states – get the financing you need no matter where you live
- Rates: 8.19% to 18.00%
- Loan Amounts: Not disclosed
- Eligibility Requirements: Only Navy Federal Credit Union members are eligible for personal loans. Approval is based on credit history, employment and income, and other factors.
- Repayment Terms: 3 to 15 years
- Read More: Navy Federal Personal Loans Review
Digital Federal Credit Union
- Rates: As low as 9%
- Loan Amounts: Not disclosed
- Eligibility Requirements: Only DCU members are eligible for personal loans. Approval is based on credit history, employment and income, and other factors.
- Repayment Terms: Up to 60 months
- Read More: DCU Personal Loans Review
PenFed Credit Union
- Rates: As low as 6.49%
- Loan Amounts: $500 to $25,000
- Eligibility Requirements: Only PenFed members are eligible for personal loans. Approval is based on credit history, employment and income, and other factors.
- Repayment Terms: 36 to 60 months (borrowers may not choose loan terms that result in monthly payments less than $50)
- Read More: PenFed Personal Loans Review
Alliant Credit Union
- Rates: 6.74% to 10.74%
- Loan Amounts: $1,000 to $50,000
- Eligibility Requirements: Only Alliant members with credit scores of at least 600 are eligible for personal loans. Rates are based solely on credit score, but approval is based on credit history, employment and income, and other factors. Applicants must provide a reason for the loan.
- Repayment Terms: 12 to 60 months
Benefits of Credit Union Loans
One of the primary benefits of working with a credit union is the 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.
Credit union personal loans also often come with one-on-one customer service throughout the life of the loan. However, perhaps the biggest benefit of credit union loans is the often relaxed requirements it takes to get a personal loan.
Credit Union Personal Loan Requirements
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.
Risks of Credit Union Loans
Though it’s not necessarily considered a “risk,” most credit unions will only do business with current members or those who plan to become members at the time of application. Since this typically means you’ll need to open a checking or savings account and keep it active, this may be problematic, especially if you don’t meet membership requirements.
Because credit unions are usually smaller organization 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.
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 obviously turn to a traditional bank. Other options include:
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 sub-prime borrowers.
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.
For some borrowers, a personal loan through a credit union may be a good choice thanks to competitive rates and personalized customer service. However, to determine the best personal loan product for your unique financial situation, it’s important to analyze the difference between the rates, terms, and requirements as they pertain to all loan options.
Author: Jennifer Lobb