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How to Get a Personal Loan From a Credit Union

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Credit unions are not-for-profit financial organizations. As member-owned institutions, credit unions don’t need to turn a profit for investors. This means credit union personal loan rates can be more competitive than those found at big banks.

However, credit unions require you to be a member to apply, and requirements can be hard to meet. Here’s what to expect when shopping for a credit union loan.

  1. Determine your loan needs
  2. Decide if a credit union is right for you
  3. Seek out your options for a credit union loan
  4. Compare lenders
  5. Apply to become a credit union member
  6. Formally apply for your credit union loan
  7. Await a loan decision

1. Determine your loan needs

The first step toward getting a personal loan through a credit union is to determine if you actually need a loan and, if so, how much you can afford to borrow.

Common uses for a personal loan include:

Debt consolidation or refinancing

Home improvements

Major purchases

Wedding costs

Medical expenses

Our monthly personal loan offers report can help you see typical rates you can expect based on your credit score. The higher your credit score, the more competitive loan products and rates you can expect. However, lenders also consider other factors, such as your income, during the loan approval process. A personal loan calculator can then help you calculate your monthly payments and total loan cost based on that information.

If you need a loan but have poor credit… If your credit isn’t great, you might seek out a joint applicant or a loan cosigner to improve your application. The former is someone who takes on the loan just like you, and must make payments on time just like you; the latter is someone who’s putting their name on the line, saying that they will take responsibility for the loan if payments are missed. You might also seek out bad credit loan lenders.

2. Decide if a credit union is right for you

You have three major sources for a personal loan: banks, credit unions and online lenders. Although credit unions generally offer more competitive personal loan terms than a bank, they require membership. To become a member, you may have to live in a certain area, work in a specific field or fulfill another requirement. What’s more, online lenders may offer loans that are just as competitive, though they have no physical branches and may only offer loans.

Compare your options below:

Comparing credit unions vs. banks vs. online lenders
What it is Pros Cons
Bank For-profit institution that typically has physical branches and a variety of products to choose from.
  • Name recognition and plenty of branches
  • Ability to bank and borrow with a single company
  • Tend to have the latest tech offerings, like mobile apps
  • May have higher rates compared to other options
  • Harsher requirements to borrow
Credit union Member-owned not-for-profit financial institution. Typically has fewer physical branches than banks and a variety of financial products.
  • Better personal loan rates than a bank with the same banking options
  • More forgiving loan requirements
  • Fewer fees
  • Must be a member to apply
  • May not have the latest tech offerings, like mobile apps
Online lender For-profit, online-only lenders with no physical branches and few financial products.
  • Highly competitive loan rates and terms
  • Wide variety of lenders to choose from
  • No member requirements
  • Fewer financial products
  • No option to meet your lender face-to-face

3. Seek out your options for a credit union loan

If a credit union sounds right for you, you’ll want to find credit unions that suit you and your needs. Use an online search tool, such as this one from DepositAccounts, to find credit unions near you where you can qualify for membership.

When picking a credit union, review membership requirements to see if you qualify, as well as financial offerings and fees. To help kickstart your search, consider these credit union personal loans:

3 credit union personal loans
APR Repayment term Borrowing limit
Alliant Credit Union 6.24% – 10.24% 12 to 60 months $1,000 to $50,000
Navy Federal Credit Union 7.49% – 18.00% Up to 60 months $250 to $50,000
PenFed Credit Union 5.99% – 17.99% Up to 60 months $500 to $50,000
Our personal loan marketplace includes non-credit union lenders.

Alliant Credit Union

Alliant is the largest credit union in Illinois, though it has locations across the nation. Their personal loan offers the lowest minimum and maximum APR on this list, making it an affordable loan option. However, low rates can mean stricter borrowing requirements — you’ll only get that low rate if your finances are in good shape.

If you’re looking for a large credit union personal loan, Alliant’s maximum borrowing limit is high at $50,000. And although its minimum borrowing amount is not as low as those of Navy Federal Credit Union and PenFed Credit Union, it is still competitively low when compared with other lenders.

Who qualifies for membership:

  • Current or retired employees from one of Alliant’s business partners.
  • Immediate family members or domestic partners of current Alliant members.
  • Those who live or work in close proximity to Alliant’s Chicago headquarters.
  • Members of other qualifying partnerships.
  • Members of Foster Care to Success (FC2S).

Navy Federal Credit Union has more than 9 million members and over 300 branches worldwide. Their personal loan is similar to Alliant’s offering, but with slightly higher rates. One benefit of a Navy Federal Credit Union loan is that you can borrow a small personal loan, for as little as $250 — that’s impressively low. The major downside with this lender, however, is that membership is limited to military servicemembers, certain civilian workers or those with a direct connection with someone in the armed forces.

Who qualifies for membership:

  • Active duty, retired and veteran members of the armed forces.
  • Immediate family members of servicemembers.
  • Department of Defense civilian workers.

PenFed Credit Union

PenFed Credit Union has 2 million members scattered across the globe and locations throughout the U.S. They offer similar rates to Alliant, but with a low minimum borrowing limit of $500. Their maximum personal loan amount is also low, at $50,000.

Who qualifies for membership:

  • Current, retired or honorably discharged members of the military.
  • Employees of a PenFed partner.
  • Those who live or work in close proximity to a PenFed branch.
  • Employees of the U.S. government.

PenFed notes that it also allows membership through other means of eligibility; contact PenFed to see if you qualify.

4. Compare lenders

After researching personal loans offered by credit unions, you’ll want to narrow down your search to just a few lenders. Oftentimes, you can prequalify for a loan with a soft credit check (which won’t affect your credit) to help you compare lenders. Some lenders may require you to become a member to even apply for prequalification.

During the prequalification process, you’ll provide basic info such as your name, Social Security number, address, income and desired loan amount. The lender website will then kick back what loans could be available and at what rates. It’s important to note that prequalification is not a guarantee of loan terms — it’s simply meant to help you compare options and see what you could qualify for after formally applying.

Once you’ve prequalified with a few lenders, you can compare options by the following factors:

  • APR: The annual percentage rate is the annual rate of interest plus fees charged by your lender. Typically, the higher your credit score is, the lower your APR will be and, thus, the more affordable the loan will be.
  • Borrowing limits: Make sure the credit union offers a loan large or small enough for your needs. Avoid borrowing more than you need.
  • Repayment terms: The typical personal loan has repayment options between 12 to 60 months. A shorter term means a lower overall cost of borrowing but higher monthly payments, while the reverse is true with a long-term loan.
  • Credit requirements: Many lenders will have a minimum credit requirement for securing a personal loan. If you fall below the threshold, qualifying could be difficult. A lower credit score also means higher borrowing costs. See if you can improve your credit before borrowing to minimize costs.
  • Loan perks: Some lenders offer borrowers additional benefits, such as financial assistance when times get tough.
  • Membership: Make sure that the credit union you’re joining makes sense for you. Ask questions, such as: Is it conveniently located? Does it offer banking products you’d typically use?
  • Customer reviews: Find out what current members have to say. If a credit union has a lot of negative reviews, it’s worth doing additional research.

5. Apply to become a credit union member

In order to obtain your personal loan from a credit union, you’ll first need to become a member of the organization. Applying is simple: You’ll provide information regarding how you qualify for membership, as well as your name, government-issued ID, Social Security number, address and phone number. Expect a soft credit check, as well. Once your membership is approved, it’s time to apply for your loan.

6. Formally apply for your credit union loan

When you’re ready to apply, you’ll fill out a formal loan application. Be prepared with identification and proof of address, your Social Security number and employment and income details. You’ll also be asked how much you’d like to borrow, and submit to a hard credit check, which will ding your credit score (but only temporarily).

7. Await a loan decision

The loan approval process is typically quite fast. In some cases, you’ll find out if you’re approved the same day you applied. Likewise, if you’re approved for the loan, the funds can be dispersed to you as early as the same day you apply, or at least within a few business days.

If you are denied for the personal loan, don’t fret. The main reasons for a lender declining you include a problem with your credit or your income. If your denial was specifically a result of information in your credit report, you’ll receive an adverse action letter that provides details on what prompted the denial and what items you might need to address. Review the factors that led to your denial and address those issues.

If there was a problem with your credit, review your credit report for inaccuracies and fix them. Pay down your other debts so that your debt-to-income ratio is improved. Be sure to make all bill payments on time. If there’s a way to increase your income, do so. Once you have made the necessary adjustments, go ahead and reapply for the personal loan.

 

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