Credit unions are entities that offer financial products to consumers. Unlike traditional banks, credit unions are member-owned and put the interests of their members first. Additionally, credit unions are non-profit organizations that exist not just to generate profit, but to serve their members. These financial institutions offer personalized services and it is not uncommon for cost savings to be passed on to account holders.
For example, the national average rate on a 36-month unsecured fixed rate loan from credit unions was 8.77 compared to 9.85 for banks as of March 25, 2022, according to the National Credit Union Administration ( NCUA). For these reasons, credit unions are worth considering if you’re looking for a personal loan.
Credit unions offering personal loans
With over 5,400 credit unions in the United States, there is no shortage of lending options. However, it is relevant to consider only those that offer the most competitive loan terms. You must also meet the eligibility criteria of the credit unions you are considering and ensure that the loan amounts match your financial situation.
Although there are many options across the country, some credit unions also offer online services.
|Lender||Rates||Loan conditions||Loan amounts||Minimum credit score requirement|
|PenFed||6.74% – 17.99%||Up to 60 months||Up to $50,000||Unspecified|
|Suncoast Credit Union||From 10.00%||Up to 96 months||Up to $30,000||Unspecified|
Founded in 1935, PenFed Credit Union is a viable option for personal loans. If you have excellent credit, you may qualify for a very competitive interest rate, which makes borrowing more affordable. Plus, you’re free to use the loans however you see fit, whether it’s to cover a financial emergency, make a major purchase, make expensive home repairs, or pay off high-interest debt. Even better, the lender allows co-borrowers if your credit score is lower and you want to boost your chances of approval by applying with a co-applicant.
There are no origination fees and most loans are funded within one to two business days of approval. You’ll get a loan term of up to 60 months, and PenFed doesn’t charge a prepayment penalty if you decide to pay off the loan early.
Suncoast Credit Union
Suncoast Credit Union opened in 1934 and today is Florida’s largest credit union. It offers flexible personal loan solutions that have no application fees or prepayment penalties. Plus, the rates are among the lowest in the industry.
It’s also easy to manage your loan on the go. You can schedule payments through a secure online dashboard, using mobile payments through the SunMobile app, or through automatic bill payment. You will also be able to set up payroll deductions. This means that loan payments will be taken from your salary, making it easier to budget your hard-earned money.
How to get a personal loan from a credit union
Are you ready to apply for a personal loan? Once you’ve decided how much you want to borrow, the process is relatively simple and shouldn’t take you long. Here’s a step-by-step breakdown of what to expect:
- Step 1: Apply for membership. Once you’ve narrowed down your options and created a short list of the best credit unions, apply for membership. You will need to provide your name, address, phone number, social security number, and a copy of your driver’s license, passport, or government-issued ID. Most credit unions also perform a soft credit check when reviewing your membership application.
- Step 2: Submit a personal loan application. The credit union will generally request the same personal information and documents that you provided when applying for membership, as well as information about your employer and your income statements (i.e. latest payslips ). You will also need to accept a firm credit check for the lender to process your loan application. This could temporarily lower your credit score by a few points.
- Step 3: Receive your loan proceeds. Most lenders render decisions relatively quickly, sometimes within hours. If your application is approved, the lender will ask you for any additional documents they need (if any) and finalize your closing documents. Once you sign on the dotted lines, you could receive funds in just a few business days.
How to qualify for a personal loan from a credit union
Each lender has their own set of guidelines for potential borrowers. Nevertheless, you will want to meet these criteria to potentially qualify for a personal loan from a credit union:
- Be a member of the credit union from which you wish to obtain a loan.
- Have an acceptable credit history, credit score and debt.
- Provide proof of stable income.
- Demonstrate your ability to make timely loan repayments
Some credit unions offer online pre-approvals that let you see loan terms, rates, and monthly payments you may qualify for. Additionally, there is no impact on your credit score since the pre-approval process only requires a soft credit check.
You can also inquire about the eligibility criteria directly with the lender before applying. This can save you time when selecting personal loan options.
How to decide if a credit union is the right lender
Before deciding if a credit union is the right lender for you, it’s worth considering the pros and cons to make sure you’re making the right choice.
- Some offer more flexible lending criteria than traditional banks.
- You could be approved with a lower credit score if you have a working relationship with the credit union you are considering.
- Interest rates are generally more competitive compared to what traditional banks offer.
- There are usually fewer fees than you’ll find with banks and online lenders.
- Financial products and services are only available to members.
- You may be offered a loan amount that is much lower than what you need.
- Some credit unions do not offer innovative mobile banking technology like traditional banks and online lenders.
At the end of the line
Credit unions are a viable option when considering a personal loan. They offer personalized service and competitive rates, and you can rest easy knowing you’re dealing with a financial entity that puts its members first. Nonetheless, there are a few downsides to consider when evaluating your options. Ultimately, it’s best to get quotes from at least three credit unions to ensure you get a great deal on a personal loan.