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The Best Credit Union Personal Loans of 2021
Personal loans can help you fund home improvement projects, weddings, debt consolidation and other personal life events. Before running to a big-box financial institution, consider applying for your next personal loan from your local credit union. Because of their non-profit structure, the best federal credit unions can offer flexibility and rates not possible through traditional national banks.
To help you compare credit unions and find the best credit union loans, we used our SimpleScore methodology to compare APRs, loan amounts, transparency, support and fees for the best credit unions offering loans to customers.
The 6 best credit union loans of 2021
- Best for 90-Day Deferment: Truliant Federal Credit Union
- Best for Same-Day Funding: Alliant Credit Union
- Best for Rate Discount: Connexus Credit Union
- Best for New Borrowers: Golden 1 Credit Union
- Best for High Loan Amounts: First Tech Federal Credit Union
- Best for Mobile App Account Management: PenFed Credit Union
|APR||Loan Amount||Membership Requirement||SimpleScore|
|Truliant Federal Credit Union||8.49%–14.74%||$500–$35,000||4.4/5|
|Alliant Credit Union||6.24%–10.24%||$1,000–$50,000||4.6/5|
|Connexus Credit Union||Starting at 7.99%||$5,000–$25,000||3.6/5|
|Golden 1 Credit Union||5.99%–12.99%||$1,000–$75,000||4.2/5|
|First Tech Federal Credit Union||Starting at 6.70%||$500–$50,000||3.8/5|
|PenFed Credit Union||6.49%-17.99%||$500–$20,000||3.6/5|
*Rates accurate as of December 11, 2020, and exclude autopay discounts.
What is a credit union personal loan?
A credit union personal loan is a form of credit that individuals can use for personal expenses, such as medical expenses, home improvements or debt consolidation. These loans are typically offered as term installment loans, meaning the borrower will repay the credit union a set amount each month according to a predetermined schedule until the loan is paid in full.
How credit union personal loans work
Credit union personal loans are very similar to personal loans through other financing institutions with one major exception — borrowers who obtain a loan from a credit union generally must be members of the credit union to finalize the loan.
The repayment terms and amount of each loan will vary among different lenders, but local credit unions will often offer better rates on personal loans than other financing institutions.
The APR, or annual percentage rate, of interest charged on credit union loans is generally lower than rates charged on other types of personal loans. Since credit unions are non-profit community-based organizations, they have the flexibility to provide financial assistance to local community members and take on riskier, less-profitable loans. For-profit national banks must answer to shareholders and demonstrate sound financial practices, so they will assign higher interest rates to borrowers with credit issues.
Credit unions can also be more flexible with loan amounts, and many credit unions offer personal loans starting at just $500. Since larger banks typically won’t bother with such small loan amounts, working with a credit union may be the only way that some borrowers can obtain a personal loan that fits their needs. Small personal loans can also be a great way to build credit for borrowers with lower credit scores.
To facilitate loan transactions, a credit union will leverage the savings of its members to loan money to other members to generate income. To benefit from these financial services, a borrower must be a member of the credit union. Some credit unions will allow an individual to apply for a loan without being a member, but nearly all credit unions will include active membership as a condition of closing on the loan.
[Related: How to Compare Banks and Credit Unions]
How to choose the best credit union loan for you
Choosing a loan from the best federal credit union begins with a detailed understanding of your needs and the ability to repay any amount borrowed. Since credit unions have membership requirements for all financial services provided, there are several steps involved in choosing the best loan for your situation.
- Determine your need. With personal loans, you’ll need to consider both the amount and the purpose of your loan. Some lenders have restrictions on the uses of a personal loan, and you may be asked to provide some type of documentation. For example, if you want a personal loan to cover the costs of purchasing and installing a pool at your home, you may be asked to provide proof that your home owner’s insurance is aware of your plans and will allow coverage once the pool is installed.
- Apply for membership. Credit unions will require you to be a member as a condition of granting the loan, so it’s best to confirm your membership early. You don’t want to get approved for a loan only to have it fall through at the last minute because you didn’t meet the requirements to become a member of the credit union.
- Apply for the loan. Gather and submit any requested documentation, references, and personal information. Credit unions tend to ask for more documentation than other lenders, but that’s just so they can work as hard as possible to get your loan approval.
- Finalize your loan. Many credit unions have an internal underwriting department that can process and approve personal loans within the same day. If you have your application and documentation gathered correctly, you’ll likely be signing paperwork and finalizing your loan within a few hours of applying. Once you are approved and you’ve had a chance to review the terms of the loan, finalize it by providing any additional paperwork requested and signing all documents.
We welcome your feedback on this article and would love to hear about your experience with the credit union personal loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.