Credit union personal loans

Both local and national credit unions offer personal loans for people of all credit profiles. However, most loans are only available to members.

Compare personal loans from some of the largest credit unions

Name	APR	Min Credit score	Max loan amount
PenFed Credit Union personal loans	8.99% to 8.99%	580	$50,000
Navy Federal Credit Union personal loans	8.99% to 8.99%	Varies	$50,000
Alliant Credit Union personal loans	10.49% to 10.49%	640	$100,000
Consumers Credit Union Signature loan	11.99% to 11.99%	700	$40,000
Teachers Federal Credit Union Personal Loans	7.99% to 7.99%	Varies	$35,000

What sets credit union loans apart?

Unlike many other lending institutions, credit unions are nonprofits. This means their end game isn’t making profits for its shareholders but providing its members with more competitive services.

Because of this, you’ll need to become a member before you can qualify for a personal loan from a credit union. Some credit unions offer membership to limited groups of people, so be sure to check if you qualify.

• Credit unions vs. online lenders

  Where credit unions shine

  Credit unions and online lenders typically have more flexible requirements than banks and are typically more friendly to online customers.

  However, credit unions often offer more competitive rates and come with the added benefit of personalized service — if you have any questions, you’ll be able to visit a branch and meet with someone in person.

  Where online lenders shine

  Online lenders beat credit unions on two fronts: 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 to be eligible. As long as you live in a state serviced by the lender, you’ll be able to have money deposited into your bank account.

• Credit unions vs. banks

  How they’re similar

  Credit unions are much closer to banks than other types of lenders. They offer a wide range of financial services, including checking and savings accounts, CDs, retirement funds and multiple types of loans. The applications are typically more involved than online lenders and can take a few weeks to process.

  How they differ

  The key difference between credit unions and banks is that credit unions tend to have less strict eligibility requirements, especially compared to international banks.

  They usually also have more information available online, often providing tables, calculators and other tools so you can estimate how much you’ll pay before you apply.

How can credit unions offer low rates?

Credit unions can offer low rates because of the way they’re structured.

Credit unions have a strong focus on their community of members and use a democratic approach when electing a board of directors. This board provides general oversight of the credit union’s functions and keeps the best interest for the credit union’s members in mind when making decisions.

Because credit unions are nonprofit, their earnings are put back into the members’ pockets — usually in the form of lower interest rates, reduced fees and better terms. This means that you may end up paying less for a personal loan from a credit union than you would from a bank or online lender.

What types of personal loans can I get from a credit union?

While the exact type of personal loan you can get from a credit union will depend on what the credit union offers and your credit, most usually have a combination of three different personal loan types:

• Unsecured personal loans. With an unsecured loan — also called a signature loan — you won’t have to put up any collateral. And if you have good credit and a regular source of income, you may qualify for a low interest rate.
• Secured personal loans. Secured personal loans are less common, but they allow you to put up collateral — usually a certificate of deposit or a savings account — that acts as collateral should you default. This lowers your potential interest rate and makes it easier for people with less-than-perfect credit to qualify.
• Payday alternative loans (PALS). Available at some federal credit unions, PALS are short-term loans $200 to $1,000 with interest rates capped at 28%.

Loan options from bad to good credit

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Pros and cons of credit union personal loans

What do I need to apply for a credit union personal loan?

To get a personal loan from a credit union, you first need to become a member. Each credit union has different stipulations for joining — this is called the field of membership. 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 a personal loan, such as:

• Personal identification. Driver’s license, state identification card, Social Security card or passport.
• Personal details. Verification of address with either a copy of a lease or any recent utility or credit card bills. Also, proof of past or current income with W-2s, recent pay stubs or bank statements.

More loan types offered by some of the largest credit unions

Credit union	Other loan types offered
Navy Federal Credit Union	Mortgages, Home equity loans Car loans Leisure vehicle loans Student loans
PenFed Credit Union	Mortgages Home equity loans Car loans Leisure vehicle loans Student loans
Alliant Credit Union	Mortgages Home equity loans Car loans, Commercial real estate loans Student loans
Consumers Credit Union	Mortgages Car loans Business loans
San Diego County Credit Union	Mortgages Home equity loans Car loans
Teachers Federal Credit Union	Mortgages Home equity loans Car loans Leisure vehicle loans Student loans
State Employees Federal Credit Union	Mortgages Home equity loans Car loans Leisure vehicle loans Student loans

While not common, some credit unions offer business loans. These are best for companies that only need small amounts of financing — under $50,000 — and want to establish a long-term relationship with a community financial institution.

Important factors to consider before joining a credit union

Since local credit unions don’t have as wide a reach as big banks, switching to one can have more of an impact on your daily life than you might expect. Credit unions typically require you to be a member in order to get a loan through them. Consider these factors when you’re deciding whether or not to join a credit union.

• Locations. Can you get to a branch of your credit union easily? If not, how long will it take? How important is having a nearby branch?
• ATM charges. If you travel a lot, you might end up paying a lot in ATM fees since most local credit unions don’t have ATMs across the country. Some — like NYUFCU — get around this by having co-op ATMs across the country, though that’s more the exception than the rule.
• Online banking. Many credit unions still have limited online banking options — they’re good for person-to-person transactions. If you like having a teller who remembers your name, your local credit union could be what you’re looking for.
• Bank account options. While credit unions typically offer a wide range of personal loans, your options might be more limited when it comes to the bank account you have to open to qualify. If you have a specific bank account in mind, you might not have as much luck with a credit union.

Bottom line

If you’re already a member of a credit union, then applying for a personal loan may be a good idea. If you’re looking into becoming a member, competitive loan interest rates may be the deciding factor.

However, you should still compare your other loan options. Credit unions may take longer to process your application, and you may not qualify for as much as you would with an online lender. Take your time, and remember: the best loan is the one that keeps your payments low while covering your financial needs.

Frequently asked questions

What eligibility criteria do I have to meet to become a credit union member?

This depends on the credit union you choose. While some offer membership to all Americans, others limit their membership to employees, staff or students of specific institutions and their family members.

Who can apply for a personal loan through a credit union?

You can apply if you’re a member and if you have a regular source of income. To become a member, you’ll have to complete an application and provide an acceptable form of photo ID.

Do credit unions charge loan processing fees?

Credit unions tend not to charge loan processing or loan settlement fees.