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3 Best Places to Get a Personal Loan From Credit Union
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When you need cash for a large expense, a personal loan from a credit union could fit the bill. Credit unions tend to have lower interest rates than banks on products like personal loans. Still, it’s important to compare credit union loans to determine which have your best terms. Below, we look at three credit union personal loans with some of the best features and terms on the market.
In this guide:
3 best credit unions for personal loans
|Credit Union||APR rates||Loan amounts|
|Navy Federal Credit Union||7.49%–18.00%||$250 to $50,000|
|PenFed Credit Union||5.49%–17.99%||Up to $50,000|
|Alliant Credit Union||6.24%–10.24%||$1,000 to $50,000|
Navy Federal Credit Union: Best for fair or bad credit
- APR: 7.49%–18.00%
- Terms: Up to 60
- Borrowing limits: $250 to $50,000
- Origination fee: None
- Credit score requirement: Not specified
Navy Federal Credit Union is on the high end in terms of personal loan APRs on this list. It does, however, offer the lowest borrowing limit and the option for shorter available terms, which may make it a better choice for those who want to borrow a smaller amount over a shorter period.
What makes this a good choice for borrowers whose credit needs polishing is not only is Navy Federal’s APR rate capped at 18% while other types of lenders can charge up to 36%, but this credit union also allows borrowers to cosign on loans or apply for secured loans. This means that, while you probably won’t get this credit union’s lowest rates, you won’t get stuck paying extremely high interest rates if you don’t have great credit. Navy Federal can generally fund an approved personal loan immediately and charges a late fee of $29.
|No origination fee||Higher APR rates compared to other credit unions on this list|
|Low minimum borrowing limit||Must have a military tie in order to be eligible for membership|
|Allows borrowers to cosign on loans||There is a $29 late fee if you miss payments|
How to join Navy Federal Credit Union
If you don’t know how to get a loan from a credit union, the first thing you’ll want to do is learn about membership eligibility requirements. To join Navy Federal Credit Union, you’ll need to meet the following requirements:
- Be a current or retired member of the armed forces
- Be a Department of Defense civilian employee, contractor or retiree
- Be a family of current members, including parents, grandparents, siblings, grandchildren and household members are also eligible
PenFed Credit Union: Best for excellent credit
- APR: 5.49%–17.99%
- Terms: Up to 12 to 60
- Borrowing limits: Up to $50,000
- Origination fee: None
- Credit score requirement: 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 institution’s late fee is $29.
|Lowest APR rates compared to the rest of the credit unions on the list||Charges late fees|
|No penalties for paying off your personal loan early||Can take one to two business days to deposit funds into your account|
|No origination fee||If you have excellent credit, you may be able to find lower rates elsewhere|
How to join PenFed Credit Union
You don’t need to become a member to apply. However, should you choose to move forward and fund your loan, you’ll need to become a member. It’s an easy process and anyone can join. To establish your membership, PenFed will open a Savings/Share Account for you. You’ll need to provide a $5 initial deposit.
Alliant Credit Union: Best for debt protection
- APR: 6.24%–10.24%
- Terms: 12 to 60
- Borrowing limits: $1,000 to $50,000
- Origination fee: None
- Credit score requirement: Not specified on lender website
Alliant offers same-day funding, over 80,000 ATM locations and no prepayment penalties on credit union loans. Downsides to Alliant’s personal loans, however, is that the longer your loan term is, the higher the minimum APR rate becomes, and the organization has no branch locations. This makes Alliant a more strategic lender for those looking for short-term loans. A particularly striking feature is the institution’s optional debt protection plan, which helps to make Alliant a contender as the best credit union for loans. Through this paid plan:
- A borrower’s loan balance can be canceled upon death (up to $100,000)
- Up to 12 payments can be canceled in the event of disability
- As many as three payments can be canceled after involuntary unemployment
|No prepayment penalties||Minimum APR rate increases the longer the length of the loan|
|Can offer funds the same day you apply online||No physical branches you can visit|
|Extensive number of ATM locations (80,000+)||Does not offer secured loans as an option|
How to join Alliant
Unlike credit unions with eligibility hinging on borrowers living in a certain area or working for a specific employer, Alliant allows anyone to join if they become a member of Foster Care to Success (FC2S), an organization that aids teens in foster care near to aging out of the system. (Alliant will cover the $5 FC2S membership fee.) Others who may join include:
- Residents of select Illinois communities (mainly in the Chicago metro area)
- Current or former employees of partner businesses
- Immediate family members to current Alliant members
How a credit union personal loan works
Credit unions are nonprofit organizations that are often member-owned and typically serve a particular area or demographic, like people with ties to the military. Oftentimes, credit unions are run by members who elect board members who manage the nonprofit.
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.
Credit union vs. online lender and bank personal loans
Unlike other types of lenders, such as online lenders and banks, credit unions are legally obligated to adhere to a limit of 18% APR for most types of loans. Meanwhile, online lenders and banks can charge sometimes as high as nearly 36% APR for those with bad credit. According to LendingTree data, the average APR rate for someone applying for a personal loan with a credit score below 680 is 24.74%. This may make personal loans from credit unions overall cheaper for some borrowers.
However, there are a few downsides to getting a personal loan from a credit union rather than an online lender or bank. Some credit unions require that you visit the organization’s branch in-person to be approved for a personal loan. On the other hand, online lenders typically don’t have physical locations and can approve your loan application completely remotely.
Some online lenders and banks also may also have the upperhand over credit unions when it comes to online or mobile banking technology.
Cosigned and joint personal loans
If your credit profile is preventing you from being approved for a personal loan from a credit union, you may want to see which organizations allow for borrowers to apply for cosigned or joint personal loans.
If you apply for these types of loans with someone who has good credit, this may make it easier for you to not only get approved, but gain access to lower APR rates than you would have by yourself.
Make sure your second borrower realizes that if you — the primary borrower — don’t make repayments on the loan, the lender can hold them responsible for paying it back.
Alternatives to personal loans
The following are several alternatives to getting a personal loan from a credit union that borrowers may consider if they don’t feel a personal loan is right for them.
- Credit card: Credit unions offer credit cards as an option for borrowers who don’t 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%.
Considering your next steps
Before applying for a personal loan from a credit union, you’ll want to make sure your credit score is in a good place and that you’re 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.
To select the best credit unions for personal loans, we started with a list of the largest institutions by assets under management, and then reviewed each using the following criteria:
- Lowest minimum APR
- Lowest maximum APR
- Lowest origination fee
- Range of repayment terms
- Number of states they operate in
- Widest range of eligibility requirements