Best Credit Union Personal Loans of 2023

Credit Union	Bank
Membership requirements	No membership requirement
Nonprofit status may mean fewer fees, better savings rates, and lower interest rates	For-profit structure means additional fees and higher rates may be charged to generate revenue
May rely on shared branches and ATM networks	Often has its own branches
More member perks and services	More limited and impersonal customer service
May be somewhat old-fashioned	Apps and online banking options may be more advanced

Should You Apply for a Credit Union Personal Loan?

There are a number of reasons why you may wish to take out a personal loan. Investopedia’s 2023 survey of personal loan borrowers found debt consolidation to be the most popular reason, but there are quite a few other possibilities. You may need to cover medical bills, fund a home improvement project or emergency repair, or pay for a vacation or an event.

In general, you should weigh the overall cost of borrowing against the reason you need the money to decide if it’s worth the expense. Buying things you don’t really need or that are beyond your budget could be a foolish use of a personal loan, for example. Ensure that you can meet the monthly payment for the loan duration, or you could damage your credit and hurt your chances of borrowing with good rates in the future.

Taking out a personal loan to pay for things you don’t need is usually a bad idea. However, you may be able to justify taking out a loan if it’s for an important reason, like traveling for a close friend’s destination wedding.

If you determine that going forward with a personal loan is the right move, it’s always wise to shop around and compare offers from traditional banks, online personal loan lenders, and yes, credit unions. In some cases, you may find that credit unions have lower APR or other features that make them a more attractive option.

Comparing Personal Loans From Credit Unions

When comparing personal loans, look at the whole picture—beyond just interest rates—to find a good product for you. Look at characteristics including:

APR: The annual percentage rate includes the interest rate as well as upfront fees like origination or application fees.
Fees: Some lenders charge more fees than others, including late fees, prepayment fees, application fees, and other miscellaneous charges.
Credit requirements: If you can’t qualify for a loan, then there is no point in applying. Look for a lender that offers personal loans for borrowers in your credit range.
Pre-qualification: To help you find loans in your credit range and avoid denied applications, some lenders allow you to pre-qualify to check your potential rates without hurting your credit.
Co-signer availability: If you can’t qualify on your own, applying with a co-signer who has strong credit can improve your chances of getting approved.
State availability: Some credit unions don’t operate in every state, although many have nationwide coverage.
Loan use restrictions: For the most part, personal loans can be used for a wide variety of purposes—almost anything. However, you can’t use them for illegal activities, and in many cases you can’t use personal loans to pay tuition, to fund a business, or for certain other specified activities.

How to Qualify For and Apply For a Personal Loan From a Credit Union

Qualifying for a personal loan from a credit union is largely the same as with other types of lenders. The main difference is that you’ll also have to join that credit union first to apply (or during the application process).

Once you’re a member, the credit union will require you to meet criteria including:

Being of age (you generally need to be 18 years old, but it can vary by state)
Having a minimum credit score, in some cases
Showing the ability to repay the loan, or verifiable income

The Loan Application Process

Applying for a credit union loan is usually a straightforward process that can be done online, over the phone, or in person at a branch. You can start by pre-qualifying, if that option is available, to get a sense of your chances of approval without a hard credit check. If not, you’ll go straight to the application.

Once you fill out the application, which may include uploading your identification and other documentation (such as pay stubs), you must wait for the decision—approval, denial, or a request for more information. With some credit unions, this may happen within a few minutes, or it could take a couple of days.

If you’re approved and you sign the loan agreement, your funds will be disbursed. The funds may be sent to you by check, deposited in your bank account, or sent directly to your creditors (for debt consolidation loans). Again, the funding time will vary—anywhere from same-day to a few business days.

Alternatives to Credit Union Personal Loans

In addition to credit union loans, there are other options if you’re in need of some cash flow.

Traditional bank personal loans: The process is very similar to a credit union loan, but there are no membership requirements to apply.
Home equity loans: If you own a home and have ample equity, you might consider a home equity loan, which is essentially a second mortgage. These usually have lower rates than personal loans, but they are secured by your home. In other words, if you don’t meet your payment obligation, you are at risk of losing your home.
Home equity lines of credit: A home equity line of credit (HELOC) also allows you to borrow from your home equity, but it’s a line of credit rather than a lump sum payment. You can take from it whenever you need and then pay it back down to use again—similar to a credit card.
Credit cards: In most cases, credit card APRs are higher than personal loan APRs, so a large purchase on a credit card may cost you more in the long run compared to a personal loan. That said, if you’re able to get a credit card with an introductory 0% APR period, that can buy you some time to pay off your purchase interest-free. If you need a small amount of funding, this could prove to be a better option.

Frequently Asked Questions

Getting a personal loan from a credit union can be a good idea for some borrowers, but it depends on your loan needs and personal circumstances. If you’re already a credit union member, you can start your personal loan research there. But even if you’re not yet a member of one, don’t overlook credit unions—their membership requirements are often fairly easy to meet, even if you don’t live near the main area of operations. If you’re able to qualify for a good rate with an affordable monthly payment, a credit union loan is certainly worth considering.

Getting a personal loan from a credit union is not necessarily hard or easy—it comes down to that particular lender’s borrower criteria and whether or not you meet them. Some credit unions have less stringent qualifications than others, like lower minimum credit score or income requirements. Start by assessing your credit situation by pulling your credit reports and credit score, and then find a credit union that offers loans to people in that range.

Credit union personal loan amounts vary by lender, but (based on Investopedia’s research) maximum loan amounts can range from $25,000 to $100,000; some even say they have no maximum loan amount.

Every credit union has its own credit requirements. In general, if you have a credit score in the “good” range (over 670), then you should have no problem qualifying for a credit union loan. However, many credit unions have options for borrowers in the fair or even poor score range. If you’re struggling to qualify for a loan, explore personal loans for bad credit or fair credit to find the right lender.

Whether or not credit unions are better than banks for personal loans depends on what you’re looking for in a loan product. Credit unions can offer rates that are better than or at least as good as most banks. Going with a traditional bank might have other advantages, such as a stronger app for managing the loan, for example. Ultimately, choose a lender that provides you with the least costly loan and the best customer experience possible—whether that’s a credit union or not.

Methodology

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more. To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:

Loan costs (advertised APR, fees, and six other factors): 29.25%
Loan terms (loan amount, repayment term, and three other factors): 22.25%
Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
Additional features (online application, pre-qualification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.

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