There are many well established credit unions in Canada – like Meridian, FirstOntario and Servus – who offer a variety of loan options. Credit union loans usually have less strict eligibility requirements, offer lower rates, and have quicker application processes than banks. However, you’ll usually need to be a member of the credit union in order to be eligible.
Credit unions are financial institutions similar to traditional banks, but operate as nonprofit organizations owned by all of its members (instead of a small group of owners). Credit unions have a strong focus on their community of members and use a democratic approach.
Members get to elect a board of directors who provide general oversight of keeping the best interest for the credit union’s members. Since credit unions are nonprofit, the earnings are put back into the members pockets in the form of lower interest rates, reduced fees and typically better terms for the financial products on offer, including credit union loans.
| Credit union | Interest rate | Loan term |
|---|---|---|
 | Not specified online | Not disclosed |
 | Fixed rate, secured: 8.74% Fixed rate, unsecured: 9.24% Variable rate, secured: 9.24% Variable rate, unsecured: 9.74% | 6 months – 25 years |
 | Fixed: 8.2% and up | Undisclosed |
 | Variable: From Prime + 2.75% Fixed: 10.93% (5 year, fixed) | 12 - 60 months |
 | Variable: 6.95% - 14.95% Fixed: 7.20% - 13.60% | Unspecified |
The main difference between a credit union and most other kinds of lending institutions is that credit unions are nonprofits. That means their end game isn’t making profits for its shareholders, but instead providing its members with more competitive services.
Before you get a personal loan from a credit union, you’ll have to become a member. Some credit unions offer membership to limited groups of people, so be sure to check if you qualify.
Credit unions can offer the same types of loans as banks or online lenders. Credit unions in Canada offer a wide variety of personal financing including:
Bank loans vs. credit union loansCredit unions are more similar to banks than other types of lenders — they offer a wide range of financial services including chequings and savings accounts, credit cards, retirement funds and loans.
When it comes to loans, both banks and credit unions typically have much more involved applications than online lenders have, and it can take at least a couple weeks to process and disburse loan funds.
Compared to banks, credit unions tend to have less strict eligibility requirements. They also tend to have more information available online, often providing tables, calculators and other tools allowing you to calculate your potential monthly repayments before you apply.
Online loans vs. credit union loansCredit unions and online lenders typically have more flexible loan requirements than banks. Both credit unions and banks are also usually more friendly to online customers.
Online lenders usually come up stronger than credit unions on two major factors: Turnaround time and ease of application. Online lenders can sometimes get you funds in as little as one business day.
You also don’t have to become a member and open a new bank account in order to be eligible for a loan. Credit union loans usually have more competitive rates than online lenders, however.
You have the greatest chance of getting your application for a personal loan from a credit union approved if you have a good to excellent credit score (above 660). If your score is lower than 660, your chances of approval decrease.
While credit unions tend to have more lenient eligibility requirements compared to banks, it will still be difficult to get approved for credit union loans if you have bad credit. Still, credit unions are more likely to approve borrowers with a rocky credit history compared to banks. If you’ve had trouble qualifying with banks because of bad credit, it’s worth looking into credit union loans instead.
You can increase your chances of approval by applying with a cosigner who has good credit and a higher income. Securing your credit union loan with some form of collateral will also increase your chances of approval.
If your looking for bad credit personal loans, your best bet is to apply with online lenders who specialize in working with bad credit borrowers. Read our full guide to bad credit personal loans to learn more.
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The APRs on unsecured personal loans are often higher than secured loan rates. If you’re able to provide some kind of collateral, like your home equity or your car, you may want to consider getting a secured loan. Keep in mind you will lose your collateral if you can’t make your loan repayments.
Your creditworthiness affects the APR you’re offered, so if you have a poor credit rating you may want to postpone your plan of getting a loan until you build up your credit.
If you feel you might have problems in making timely repayments, it’s important to consider how a personal loan would fit into your budget. Making late repayments will have you paying additional fees and can damage your credit score.
To get a personal loan from a credit union, you will first need to become a member. Each credit union will have different stipulations for joining. Eligibility can be determined by many factors – where you live, your employer, your family and any sort of activity within the community where the credit union operates.
Once you’re a member, there will be certain requirements when applying for credit union loans, such as:
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