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If you need to borrow money for personal expenses, a credit union personal loan can be a good choice.
Because credit unions are not for profit, they sometimes offer lower interest rates compared to banks, which can save you money over the life of your loan.
Here are some things you should know about getting a personal loan from a credit union:
6 Credit Unions You Should Consider
Unlike banks and online lenders, credit unions are typically smaller, local organizations.
This means that it is usually a good idea to begin your credit union search in your own geographic area – although there are some nationwide credit unions that you may also qualify with.
Here are six credit unions that offer personal loans. Note that PenFed is a credible partner while the other credit unions listed are not.
How to get a credit union personal loan
Getting a personal loan from a credit union is a little different from other types of lenders, mainly because you must become a member of the credit union in order to qualify for a loan.
When you’re ready to get a personal loan from a credit union, follow these four steps:
- Look around and compare credit unions. Find out which credit unions you can join. After you’ve made an extensive list, compare interest rates, repayment terms, and any fees charged by credit unions to find the right loan for you.
- Choose your loan option. After you have compared credit unions, choose the loan option that best suits your needs.
- Please, fill in the application! When you’re ready to apply, you’ll need to fill out a full application and submit any required documents, such as tax returns or pay slips.
- Get your loan funds. If you are approved, the credit union will have you sign for the loan so they can transfer the money to you. The funding time for credit unions is usually one to seven working days, depending on the lender.
It is also important to take into account how much the loan will cost you over time. You can use our personal loan calculator to estimate how much you will have to pay for a loan.
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How to qualify for a credit union personal loan
All personal loan lenders have their own requirements in order to qualify for a loan. However, there are some general criteria that you are likely to come across when looking for a personal loan from a credit union. In general, for example, you will need:
- Good to very good credit rating (usually a score of 700 or higher)
- Low debt to income ratio
- Stable income and employment history
- Eligibility to become a member of the credit union
Learn more: Where can I get a personal loan?
Advantages and disadvantages of credit unions
Here are some pros and cons to consider before taking out a credit union loan.
- Lower rates: As of December 2020, the average credit union personal loan interest rate was 9.09% compared to the average 10.24% for Bank loan.
- Community-oriented: Credit unions are not-for-profit organizations that serve specific areas of a community. Because of this, you may find a better customer experience and products with a credit union than with a bank or online lender.
- Must become a member: Credit unions are required by law to limit their membership to certain categories – this is known as the membership field. In many cases, a credit union’s membership scope extends to individuals who live in a particular area, work in a particular profession, or join an associated nonprofit group. In order to obtain a loan with a credit union, you must qualify for membership.
- Limited availability: Because credit unions have membership criteria, they are not always available nationwide. While some are available nationwide, many are small, local financial institutions that you may not be able to join.
Cash: Debt Consolidation Loans
Alternatives to Payday Loans
Some credit unions offer alternative payday loans (PALs), which are usually Small loans with short terms that you can bridge to your next paycheck.
However, while PALs serve a similar purpose to payday loans, they are much more affordable and do not involve predatory lending practices.
Generally, PALs range from $ 200 to $ 2,000 with terms of one to 12 months, depending on the credit union. Keep in mind that in some cases, you will also need to be a member of the credit union for a period of time before you can apply for a PAL.
Here’s how a PAL compares to a typical payday loan:
|Alternative Payday Loan (PAL)||Payday loan|
|Average interest rate||Up to 28% APR||300% to 500% APR
(may be higher depending on the lender)
|Loan amount||$ 200 to $ 2,000
(depending on the type of credit)
|Usually $ 50 to $ 1,000|
|Minimum. credit-worthiness||Depending on the credit union||N / A|
|Time to finance||Depending on the credit union||Same day|
Learn more: Credit card consolidation loans
Credit Unions vs. Online Lenders
When looking for a personal loan, it is important to compare not only credit unions but also other types of lenders, including online lenders.
Here are some key points to keep in mind when looking at credit union personal loans versus online lenders:
|Credit unions||Online lender|
|Time to finance||Already on the same day
(depending on the lender)
|Already on the same day
(depending on the lender)
|Where can I find them||Often available locally, but sometimes nationwide||Usually nationwide|
|Discounts||May offer autopay discounts||May offer autopay or loyalty discounts|
|membership||You must be a member of the credit union to apply
The authorization can be based on:
|No membership requirement|
When choosing a personal loan, remember to compare as many lenders as possible to find a loan that suits your needs. Credible makes it easy for you – you can compare your pre-qualified rates from our partner lenders below in two minutes.