Credit unions are member-owned, not-for-profit institutions that offer personalized customer service and charge lower average interest rates on personal loans than banks.
While you typically need to be a member to borrow from a credit union, signing up is usually easy — some credit unions allow you to apply for a loan and membership at the same time. Certain credit unions also offer payday alternative loans (PALs) for borrowers with poor credit (a FICO score below 580).
Our top pick for credit unions for personal loans, Alliant, offers a digital experience, high borrowing limits, fast funding, and relatively low rates.
Best credit unions for personal loans
Best for large loans: Alliant Credit Union
Alliant Credit Union is a digital credit union with a highly rated mobile app that offers access to over 80,000 in-network ATMs. There are several pathways to becoming an Alliant member. One option open to virtually anyone in the United States is to become an Alliant Credit Union Foundation digital inclusion advocate for $5 (Alliant is covering this fee for a limited time).
Alliant offers personal loan borrowers perks, like a hardship program and an autopay discount, in addition to high borrowing limits, fast funding, relatively low rates, and no origination fees.
- Starting APR: 9.49%
- Origination fee: None
- Loan amounts: $1,000 to $100,000
- Repayment terms: 1 to 5 years
- Funding time: As soon as the same day
Best for long terms: First Tech Federal Credit Union
First Tech is a credit union with almost 40 branches across several states that also offers online banking and loan services. While membership is geared toward people who work in the tech industry, there are several ways to gain access to membership - such as working for one of 900-plus partner companies, including Amazon and Microsoft, or having someone in your family or household who is already a member.
First Tech offers an optional debt protection plan and 45-day payment deferral with its personal loans, in addition to low rates, few fees, and flexible terms up to 84 months.
- Starting APR: 8.14%
- Origination fee: None
- Loan amounts: $500 to $50,000
- Repayment terms: 6 months to 7 years
- Funding time: Typically within 1 business day
Best for low rates and easy access: PenFed Credit Union
PenFed is the second-largest federal credit union in the U.S. and has branches nationwide. It's easy to apply online, and membership is open to anyone. PenFed also has a great average customer rating on Trustpilot, and offers a low starting APR on personal loans, with terms up to five years.
- Starting APR: 8.99%
- Origination fee: None
- Loan amounts: Up to $50,000
- Repayment terms: Up to 5 years
- Funding time: As soon as the next day
Best for military: Navy Federal Credit Union
To be eligible for membership at Navy Federal Credit Union, you or someone in your household needs to have ties to the armed forces, Department of Defense, or National Guard. But the credit union stands out for its 350 branches worldwide, 24/7 customer service, and excellent Trustpilot rating.
Navy Federal offers a wide range of loan amounts, low starting rates, and flexible terms.
- Starting APR: 8.99%
- Origination fee: None
- Loan amounts: $250 to $50,000 ($150,000 for home improvement loans)
- Repayment terms: Up to 5 years (15 years for home improvement loans)
- Funding time: As little as 24 hours
Why you can trust Credible
The Credible editorial team is independent and unbiased, which means that partners do not influence our editorial content. To help you find the best personal loan from a credit union for your situation, we analyzed over 1,000 personal loan data points. Using data-driven methodologies, we scored criteria that are important to you. This approach allows us to objectively rank personal loans. To learn more, read our methodology below.
Methodology
We picked some of the best credit unions with branches or online access nationwide based on their rates and fees, terms, borrowing limits, and reputation for customer service. Your local community credit union may also serve your needs, so be sure to use the NCUA's credit union locator tool to find options in your area.
Compare credit union personal loan rates in October 2024
How does a credit union personal loan work?
Most credit unions offer unsecured personal loans. In addition to being a member, you may need to meet other requirements to qualify, such as having a minimum credit score or income. You can often apply for a personal loan from a credit union online.
If you're approved, the credit union will transfer the loan funds as a lump sum into your bank account, and you'll repay the loan in fixed monthly payments with interest over several months or years.
Related: How Do Personal Loans Work?
Note
Personal loans come with few restrictions — you can use the money for almost anything, including debt consolidation, emergency expenses, and home renovation.
Payday alternative loans
If you can't qualify for a personal loan from a credit union, most credit unions also offer small-dollar loans that don't require a credit check. These payday alternative loans (PALs) are designed to provide an alternative to high-interest payday loans. Interest rates for both PAL options are capped at 28%.
- PAL I: If you've been a member of a credit union for at least a month, you can take out a PAL I loan in an amount between $200 and $1,000, and repay the money over 1 to 6 months.
- PAL II: New members of credit unions are immediately eligible for PAL II loans, which come in amounts up to $2,000 and can be repaid over 1 to 12 months.
What are credit union personal loan rates?
The National Credit Union Association (NCUA) Board allows credit unions to charge no more than 18% interest on all personal loans, while the maximum rate for payday alternative loans is 28%. Credit unions return their profits to their members via lower interest rates, which is one reason why credit unions offer lower personal loan interest rates than banks.
But personal loan rates at any financial institution are dependent on individual factors, such as your credit score, income, and outstanding debts. The loan amount and term also impact your rate.
“If you have exceptional credit (a FICO score of 800 or higher), I recommend getting rate estimates from both your credit union and a few online lenders, which sometimes advertise lower starting rates than credit unions.” — Charlie Tarver, Editor, Personal Loans
Check Out: Current Personal Loan Rates
Credit union vs. bank rates
In the first quarter of 2024, the average interest rate for a 36-month unsecured personal loan from a credit union was 10.83%, compared to 11.65% at banks.
Credit union personal loans typically also have lower maximum interest rates than banks, since they're limited by the NCUA's 18% rate cap. In most cases, banks aren't subject to interest rate caps, but some banks choose to cap interest rates on personal loans at around 25%.
What can I use a credit union loan for?
You can use a personal loan from a credit union for almost any purpose, from moving expenses to home improvement to veterinary care, though credit unions typically prohibit borrowers from using the funds to pay for postsecondary education.
Keep in mind
A credit union debt consolidation loan can be used to pay off high-interest credit card debt, which may save you money and help you get out of debt faster.
In addition to unsecured personal loans, many credit unions also offer low rates on auto loans and other secured loans, such as:
- Boat loans
- Motorcycle loans
- Land loans
- Used-car loans
- RV loans
How to compare personal loans from credit unions
You can compare personal loan rates on Credible or by researching various lenders and prequalifying on their websites. Look at the following factors to compare personal loans from credit unions:
- Membership and eligibility: You may not be eligible for membership at some credit unions, and even with membership, you may not qualify for a personal loan. Some credit unions have stricter requirements than others.
- Rates and fees: The best credit unions don't charge origination fees or application fees, but some may. Some credit unions also have lower starting interest rates than others, but your individual rate offer is what's most important.
- Repayment terms: Shorter-term loans typically cost less, but you should make sure you can afford the monthly payment. You may need a longer term if your budget is tight. Check the credit union's repayment term options before applying.
- Funding time: Many credit unions can fund personal loans quickly, especially if you're already a member with a checking or savings account. If you need an emergency loan, consider the funding speed when making your choice.
- Reputation: Credit unions are not-for-profit financial institutions focused on improving the financial well-being of members. But the customer service experience can vary. Check the credit union's reputation on third-party review sites, like Trustpilot or Better Business Bureau (BBB) and, whether you're more interested in face-to-face support or digital help, make sure the customer service options meet your needs.
- Other benefits: Some credit unions offer hardship assistance, educational resources, discounts, or other benefits. If you're applying for membership, you might also want to evaluate the other banking and loan products the credit union offers and factor your future needs into your decision.
How to apply for a credit union loan
You can apply for most credit union loans online. While the process of getting a personal loan varies from one credit union to the next, you can generally expect the following steps:
- Apply for membership: If you're not already a credit union member, you'll need to be eligible for and establish membership. You may also be required to open and fund a checking or savings account with a small initial deposit. Depending on the credit union, you may be able to apply for membership at the same time that you apply for a loan.
- Prequalify: Some credit unions can provide an interest rate estimate with only a soft credit pull, which won't impact your credit score. It's a good idea to check your rate before formally applying. Prequalification is an estimate and not an official offer of credit. Rates may vary once you formally apply. Compare the prequalified rate to estimates from a few online lenders.
- Complete the application: If you prequalify with the lender of your choice, fill out the full application. This typically involves providing supporting documentation (like proof of income) and authorizing a hard credit check, which can cause your credit score to temporarily decrease by a few points.
- Sign your loan agreement: If approved, review your final rate, read the contract, and sign the documents to initiate the transfer of funds.
Alternatives to credit union personal loans
- Online personal loans: Another option is to get a personal loan from an online lender. You might have a better chance of qualifying with an online lender if you have bad credit. You might also get a lower rate if you have excellent credit, depending on the situation.
- Payday alternative loans: If you sign up to be a member of a credit union only to find you can't qualify for a personal loan, you might have luck with a PAL I or PAL II loan. But the maximum amount you can borrow is $2,000.
- Secured loans: Secured loans require you to put forth an asset as collateral, which the lender can take if you fail to repay. Secured loans may be easier to qualify for and offer lower interest rates. Many credit unions offer a variety of secured loans, such as savings- or stock-secured personal loans and home equity loans, which can also be used for a variety of purposes. You can also get a secured loan from some banks and online lenders.
- Credit cards: Some credit unions offer credit cards with benefits, like lower APRs and no cash advance fees. If you need to pay off debt or make a large purchase, you may be able to take advantage of a 0% introductory APR offer on new purchases or balance transfers. If your credit union doesn't offer the card you need, you can apply elsewhere.
- 401(k) loans: If your retirement plan offers loans, you may be able to borrow a portion of your balance. The interest on the loan goes into your retirement savings, and there's no credit check or credit impact with a 401(k) loan. But you should avoid this option if you plan to leave your job before the loan is repaid, and know that you could lose out on substantial retirement account gains.
FAQ
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