Credit Union Loans Offer Low Rates and Flexible Terms
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Your local credit union should be one of your first stops when you’re looking to borrow money, especially if you have a fair or bad credit score (689 or lower). Credit union personal loans often have benefits over those of other lenders, including:
Typically lower interest rates.
Smaller starting loan amounts.
More flexible terms.
Loan officers willing to consider factors beyond your credit score.
How do credit union loans work?
Credit unions are not-for-profit financial organizations that serve members who live, study, work or worship in a particular area. Each credit union is controlled by members, who elect volunteer board members to oversee the organization.
If you meet the credit union’s requirements, you can apply for membership, usually online. You may be required to open an account with an initial minimum deposit, typically $5 to $25. Once your membership is approved, you can access banking services, including personal loans.
Once you apply for a loan and are approved, you’ll receive the funds in your account and then repay the credit union in fixed monthly installments, with terms ranging from one to seven years.
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Best credit union personal loans for 2023
If you don’t have a neighborhood credit union, nationwide options are available. The credit unions below lend in all 50 states and Washington, D.C., and you can apply for membership online.
Alliant: Best for fast funding
Becoming a member at Alliant doesn’t require a fee, and anyone is eligible by joining Foster Care to Success, a nonprofit that serves foster teens across the country. Alliant pays the $5 membership fee to FC2S on your behalf.
Why it stands out: Alliant offers a wide range of personal loan amounts and can approve most borrowers the same day they apply. Once you sign the loan documents, Alliant can also provide same-day funding.
PenFed: Best for co-sign and joint loan options
Though PenFed is known for serving military members, anyone can join by funding a savings account with an initial deposit of $5.
Why it stands out: PenFed offers co-signed and joint loans to personal loan borrowers. By adding someone with a higher credit score or larger income to your application, you may help your chances of getting approved. Co-borrowers are equally responsible for missed payments, but in a co-signed loan, only the primary applicant has access to the loan funds.
First Tech: Best for debt consolidation
First Tech serves mostly tech companies and their employees with personal loans up to $50,000.
Why it stands out: First Tech is a good option for consolidating your debts under a personal loan, thanks to its wide range of amounts, terms and ability to send funds directly to creditors. Though direct payment to creditors isn’t essential for a debt consolidation loan, it means you don't have to send the funds.
Navy Federal: Best for military members
To be eligible for membership at Navy Federal, you must be on active duty in, retired from or a veteran of any military branch; a Department of Defense employee, contractor or retiree; or a family or household member of a service member.
Why it stands out: In addition to Navy Federal's focus on military members and their families, if you’re active-duty or retired military, you can qualify for a 0.25 percentage point discount on your personal loan’s annual percentage rate, which lowers the overall interest you’ll pay on the loan.
Credit union personal loan rates
Rates for unsecured personal loans will depend on your credit score, credit history, income and debts.
Rates can also vary by type of credit union: federally chartered vs. state-chartered.
Federal credit unions cap annual percentage rates at 18%. Your credit union may also charge an application fee that isn't part of the APR.
As of September 2022, the average APR for a three-year federal credit union loan was 9.15%, according to data from the National Credit Union Administration.
Lender | Typical APR range | Loan amounts |
|---|---|---|
10.49% - 29.49%. | $1,000 to $50,000. | |
7.74% - 17.99%. | $600 to $50,000. | |
8.99% - 18.00%. | $500 to $50,000. | |
7.49% - 18.00%. | $250 to $50,000. |
How to get a loan from a credit union
A low credit score alone won’t typically disqualify you from getting a loan from a credit union because the organization will consider your whole financial picture, including your credit history and standing as a member with the credit union, when reviewing your loan application. Still, a good score will get you a lower rate than someone with bad credit, so it pays to check your credit score before applying for a loan.
Because credit unions come in many sizes, the application process, approval criteria, rates and other aspects of a personal loan vary. Many credit unions allow online loan applications, which typically ask for personal and contact information, a Social Security number, employment and income details, and any debts.
» MORE: How to apply for a personal loan
Local or smaller institutions may require you to apply in person or close the loan at a branch.
Credit union vs. online lender
Online lenders offer loans across the credit spectrum, so they’re another option for bad-credit borrowers (629 credit score or lower) who need a personal loan.
» MORE: See your bad-credit loan options
While credit unions conduct only a hard credit check — which can cause a small temporary dip in your credit score — most online lenders typically perform soft credit checks first to see if you pre-qualify for a loan.
Online lenders also offer online applications that don’t require you to visit a branch and typically fund loans quickly.
But loans from credit unions tend to be cheaper than those from online lenders, especially for borrowers with fair or bad credit scores. Borrowers with fair credit received an average APR around 20%, according to the most recent anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace.
Lender | Min. credit score | Typical APR range | Loan amount |
|---|---|---|---|
560. | 4.60% - 35.99%. | $1,000 to $50,000. | |
None. | 8.49% - 35.99%. | $1,000 to $50,000. | |
600. | 9.57% - 35.99%. | $1,000 to $40,000. | |
600. | 8.99% - 35.99%. | $2,000 to $50,000. | |
560. | 11.69% - 35.99%. | $1,000 to $50,000. |
Next steps
If you’re a member and you can withstand a temporary hit to your credit score, a credit union may get you the cheapest loan. NerdWallet recommends comparing loans from multiple lenders.
You can pre-qualify with online lenders on NerdWallet and compare your estimated rate with one from your credit union.
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