Credit Union Personal Loans: Compare Rates and Terms - NerdWallet (2024)

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 score or lower). Credit union personal loans often have benefits over those of other lenders, including:

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 two to seven years.

Best credit union personal loans for 2024

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 likely 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 organization that serves foster teens across the country. Alliant even 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.

First Tech: Best for co-sign and joint loan options

First Tech mostly serves tech companies and their employees with personal loans up to $50,000.

Why it stands out: First Tech 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 boost 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.

PenFed: Best for a seamless application process

PenFed is known for serving military members, but anyone can join the credit union by opening a savings account with an initial deposit of $5.

Why it stands out: Not only can anyone join PenFed, but unlike other credit unions, you can apply for membership as part of the loan application, letting you combine both these steps into one. PenFed also lets you pre-qualify online to see your potential rate, loan amount and monthly payment without affecting your credit score, so you can get an idea of your loan options before you apply.

Navy Federal: Best for military members

To be eligible for membership at Navy Federal, you must be active duty, retired or a veteran of any military branch; a Department of Defense civilian; or a family or household member.

Why it stands out: In addition to focusing 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 2023, the average APR for a three-year federal credit union loan is 10.58%, according to data from the National Credit Union Administration.

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 credit unions 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.

Since 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, Social Security number, employment and income details and any current debts.

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.

While credit unions only conduct 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 18%, according to the most recent anonymized offer data from users who pre-qualified in NerdWallet’s lender marketplace.

Next steps

If you’re already 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.