How To Get A Personal Loan From A Credit Union
To get a personal loan from a credit union, take these steps:
Should I Get A Personal Loan From A Credit Union Or A Bank
When deciding whether to take a personal loan from a credit union or from a bank, there are some key differences to consider that distinguish the financial institutions from each other.
| May have lower rates on loans | May have higher rates on loans |
| May have fewer branches, and be present in fewer geographic regions | Large traditional banks may have a national presence and many branches online banks may have no branches and online-only services |
Both credit unions and banks offer general consumer financial options like checking accounts, savings accounts, home loans, credit cards, auto loans and more. But how these institutions are structured varies.
Banks, on the other hand, are for-profit businesses open to any customer. Their rates tend to be higher, but larger entities may be able to offer a wider range of products and services. Larger, traditional banks may have many branches and ATM locations, while online lenders typically do not offer in-person services.
If you’re looking for lower rates and don’t mind paying an initial, low cost for membership, getting a personal loan from a credit union may be right for you.
Conversely, if you want to work with a larger institution that may offer more services, or an online-only bank that may provide faster funding, a personal loan from a bank may be more up your alley.
What Is A Credit Union Anyway
A credit union is a non-profit cooperative financial institution.
Unlike a bank, which may be operated by a board of directors or shareholders, a credit union is operated by its members.
The way credit unions are structured generally allows them to offer better interest rates on savings and deposit accounts, charge fewer fees and offer lower interest rates on loans.
If you’re not sure where to look, you can use the National Credit Union Association website to see which credit unions are nearby locally.
Another key difference that distinguishes credit unions from banks is the membership requirement.
You can go to a bank and open an account but at a credit union, you have to be a member first.
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The Benefits Of A Credit Union Personal Loan
If you need cash to pay for a non-discretionary expense, and you dont have enough in your savings or emergency fund, a personal loan can be an excellent option.
However, all personal loans arent created equal. Its important to practice due diligence when evaluating the personal loan thats best for you, including comparing the annual percentage rate offered by each lender. Rates usually start around 6 percent APR and can go as high as 36 percent APR depending on the lender and your credit.
Think of it this way: As for-profit institutions, banks are in the primary business of making money. As non-profit institutions, member-owned credit unions pass their profits along to their membersoften in the form of everything from lower fees on loans to higher interest on savings accounts.
Finally, local credit unions often come with a level of personal service that you simply wont get at a big national or international bank. When you walk into a credit union, they want to work with you.
Best For Emergency Expenses: Alliant Credit Union
Why Alliant stands out: If you get a loan because of an unexpected expense, like a broken hot water heater or a major vet bill for your dog, you probably dont want to have to wait very long to get the funds from your lender. With Alliants personal loans, you can typically get your money deposited into your account the same day youre approved. But depending on your bank, there may be a wait before you can access your cash.
- Loan amounts Loan amounts range from $1,000 to $50,000.
- Fees There are no origination fees or prepayment penalties.
- Loan terms You can choose a term between 12 and 60 months.
- Debt protection plan available Alliant allows you to add a debt protection plan to your loan. Ranging in cost from 75 cents to $1.99 per $1,000 of your outstanding loan balance, the plan will cancel your payments or even your remaining balance if you become unemployed or disabled, or if you die.
- Membership You can become an Alliant member if youre a current or retired employee of a qualifying company, if youre a member of a qualifying organization, or if you donate to Foster Care to Success during enrollment.
Read our full review of Alliant personal loans to learn more.
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Penfed Credit Union: Best For Excellent Credit
- Terms: Up to 12 to 60
- Borrowing limits: Up to $50,000
- Origination fee: None
- Not specified on lender website
Out of all the credit unions on this list, PenFed Credit Union offers the lowest APR rates to its borrowers. Like other credit unions, PenFed issues the most competitive APRs to borrowers with excellent credit histories, so borrowers with lower credit scores getting a personal loan through a credit union should not expect to secure the lowest APR. You do not need to become a member in order to apply for a personal loan with PenFed, however, you will have to become one if you accept the loan. The institutions late fee is $29.
| Pros |
| If you have excellent credit, you may be able to find lower rates elsewhere |
How to join PenFed Credit Union
You dont need to become a member to apply. However, should you choose to move forward and fund your loan, youll need to become a member. Its an easy process and anyone can join. To establish your membership, PenFed will open a Savings/Share Account for you. Youll need to provide a $5 initial deposit.
First Tech Federal Credit Union
If you work in tech, you can try First Tech Federal Credit Union for a personal loan.
This credit union opens up membership to:
- Employees of high tech and telecom sponsor companies
- State of Oregon employees
- Immediate family members of First Tech members
- Computer History Museum members
- Financial Fitness Association members
The list of sponsor companies is quite lengthy and it features some of the biggest names in tech, including Amazon, IBM, and Google.
But, there are plenty of smaller and mid-sized companies on the list too.
It’s also extremely easy to be eligible because anyone can become a Computer History Museum and Financial Fitness Association members.
First Tech earned the number two spot in our rankings, thanks to its low personal loan interest rates and higher borrowing limit.
You can borrow $500 to $50,000 using a secured or unsecured personal loan or a personal line of credit. First Tech also gives you a bit more time to repay your loan, with terms stretching up to 84 months.
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Credit Unions Offering Personal Loans
Although credit union personal loans sometimes come with lower rates, keep in mind that youll need to join the credit union to apply.
Edited byAshley HarrisonUpdated October 13, 2021
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. By refinancing your mortgage, total finance charges may be higher over the life of the loan. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
If you need to borrow money for a personal expense, a credit union personal loan might be a good choice.
Because credit unions are nonprofit organizations, they sometimes offer lower interest rates compared to banks, which could save you money over the life of your loan.
Heres what you should know about getting a personal loan from a credit union:
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What To Consider When Taking A Loan From A Credit Union
When you’re thinking of applying to a credit union for a personal loan, make sure you have met their membership requirements and are happy with their locations and services before providing an official application.
Also, monitor your credit with Experian’s free credit monitoring in the months leading up to applying for a personal loan. This can help spot and remedy any issues with your credit report that may make it less likely to get approved.
Whats A Personal Loan
Personal loans are installment loans, meaning you repay them with a set monthly payment amount for an agreed-upon number of months or years. Theyre usually unsecured, meaning you dont need to put up any collateral to get approved.
You can use personal loans for virtually any purpose, from refinancing high-interest credit card debt to paying for unexpected expenses. Personal loans may have fixed or variable interest rates and repayment terms that typically range from one to seven years.
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How Much Will A Personal Loan Cost
Your total cost will depend on the amount you borrow, the APR your lender gives you, how long it takes you to pay off the loan, and any associated fees.
The higher the loan amount and APR, the more your loan will cost. With a longer term length, you will split up your payments over more time. This means you’ll make smaller monthly payments but pay more in total interest.
Depending on your lender, you may get your funds the same day you apply, though some credit unions may take several business days to get you your money. After your loan application is approved, a lender will usually send the money relatively quickly. However, there isn’t always a guarantee about how quickly your application will be accepted.
Considering Your Next Steps
Before applying for a personal loan from a credit union, youll want to make sure your credit score is in a good place and that youre in a financial position to repay the loan.
You may want to shop around and compare factors such as APR rates, terms and loan amounts from several lenders before committing yourself to one. This way, you can decide on the loan that best suits your financial circumstances and can save you the most amount of money long term.
Before applying, also be sure to check that the lender offers soft-credit checks so you can find out if you prequalify without putting a ding in your credit score.
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Alternatives To Personal Loans
The following are several alternatives to getting a personal loan from a credit union that borrowers may consider if they dont feel a personal loan is right for them.
- Credit unions offer as an option for borrowers who dont want to borrow a lump sum amount but would like a revolving line of credit they can pull from as needed. Credit cards may also be a good option for those looking to earn rewards as they spend. Types of rewards credit card users can earn include cash back and travel points they can use with certain airlines.
- Personal line of credit: A personal line of credit is similar to a credit card in that it allows borrowers to utilize money from a revolving line of credit up to a certain amount. However, personal lines of credit may offer borrowers higher credit limits than credit cards do. Personal lines of credit also typically have lower APR rates than credit cards.
- Payday alternative loans: Some credit unions also offer payday alternative loans. These are typically small loans that are unsecured and only offered by federal credit unions. These types of loans are also alternatives to predatory payday loans that can carry up to 391% APR. On the other hand, payday alternative loans have APR rates capped at 28%.
Best For Large Purchases: Consumers Credit Union
Why Consumers Credit Union stands out: Credit union personal loans may have lower loan limits than youll find from other lenders, often $50,000 or less. But Consumers Credit Union allows eligible borrowers to take out as much as $100,000 with its signature loan.
- Collateral Consumers Credit Unions personal loans are unsecured.
- Penalties There is no prepayment penalty if you choose to pay off your loan early.
- Discounts If you sign up for automatic payments, you can qualify for a rate discount of up to 0.50%.
- Membership To join Consumers Credit Union, you have to make a $5 donation to the Consumer Cooperative Association and maintain a balance of at least $5 in your membership share savings account.
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Protect Your Card Transactions From Fraud
All Texans debit and credit cards are now equipped with a fraud-fighting microchip that encrypts information when making transactions at a chip-enabled terminal.
- Insert your card in the chip reader instead of swiping
- You can still swipe your card when necessary
- You can still use your card online or over the phone
Plus, chip cards are more widely accepted worldwide so your card is easier to use outside of the U.S.
How A Credit Union Personal Loan Works
In order to receive a personal loan from a credit union, organizations typically require that you become a member before either applying for or accepting a personal loan. When you become a member of a credit union, you usually have to pay a deposit and membership fee.
Like with other types of lenders, before offering you a personal loan, credit unions will take into account factors such as your credit score, payment history and income. Credit unions also offer personal loans typically with fixed rates and without the need to put down collateral this is known as an unsecured loan however credit unions offer secured loans as well.
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So How Do You Get A Personal Loan From A Credit Union
There’s no secret formula for getting a personal loan from a credit union. It’s just a matter of taking the right steps in the right order.
Golden 1 Credit Union
Golden 1 is a California-based credit union that opens up membership to people who live in and work in California, their family members, Financial Fitness Association members and members of select employee groups.
To maintain your membership, you just have to open a Golden 1 savings account and maintain a $1 minimum balance.
Golden 1 offers secured and unsecured personal loans from $500 to $50,000. You can also get a “starter” loan of up to $2,500 if you have a cosigner.
Loan terms range from 12 to 60 months, with low-interest rates. Funding is quick, with most loans funding in one to two business days.
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Apply For Your Personal Loan In Utah
If you live in Utah and are wondering whether a personal loan from your local credit union is right for you, heres one rule of thumb: If a personal loan will help you reach your financial goals , then its a good financial move.
Conversely, if you plan on using a personal loan for something that wont ultimately save you money, boost your income-generating potential, or increase the value of something you already own, it may be ill-advised from a financial wellness perspective.
At UCCU, the benefits of membership dont stop when it comes to personal loans. The same pros apply across all financial products, including credit cards. If youre thinking of opening a new credit card, go here to learn how to choose the best credit card.
What You Should Know About Credit Union Personal Loans
offer financial products and services that are the same as or similar to those of banks. With both credit unions and banks, you can access things like direct deposit, mobile banking, ATM access and overdraft protection.
But banks are for-profit institutions, meaning theyre in the business of using money to make money. Credit unions are nonprofit organizations, and theyre member-owned.
Typically, credit unions use their nonprofit status to pass savings along to their members, often giving them higher interest on savings accounts and charging lower interest rates and fees on loans.
Here are some things to know before applying for a credit union loan.
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