Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 7, 2021

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Summary

  • Credit union loans can offer better rates than traditional lenders in most cases
  • Credit union membership is often required to take advantage of the benefits associated with credit union loans
  • Credit union loan rates will vary depending on the loan purpose and security

Sometimes credit union loans can offer the most reasonable interest rates and loan terms. When you’re borrowing money, it’s always a good idea to find the lowest interest rates, especially for personal loans.

Comparing rates from different lenders can be tiresome. We’ll help by breaking down credit union personal loan rates and what you need to know about credit union loans before you get one.

In minutes, you’ll have everything you need to find the best credit union loans. Until then, enter your ZIP to get free quotes from top lenders near you.

Credit Union Basics

Many people aren’t exactly familiar with credit unions. In some states, you might see credit unions very frequently while in other states they aren’t particularly common. Most people learn about banks but not credit unions as they start to establish their first checking account.

What is a credit union? In short, a credit union is a not-for-profit bank. Banks and credit unions both have the same uses overall; however, a credit union tends to give you more power as a member.

Most credit unions allow members to have a voice in major decisions. In reality, credit union members are much like stockholders rather than just customers.

The flexibility of a credit union allows them to offer lower interest rates, fewer fees, and higher savings rates.

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How a Credit Union Personal Loan Works

Getting a personal loan from a credit union is a pretty straightforward process. Nowadays, you can apply online for credit union loans with most organizations. Securing credit union loans online is usually a fast and easy process.

That said, many credit unions will require membership to be eligible for the aforementioned credit union benefits such as low interest rates and fees. Becoming a credit union member will increase your odds of approval.

Non-members will most likely have limited access to credit union benefits in general. On the bright side, most credit unions are easy to join at a low expense. You can join the majority of credit unions for $25 or less.

Credit Union Loans vs. Personal Loans

Finding the right loan could save you a fortune in due time. If you’re a member of a credit union, you may be awarded a personal line of credit in which you can use funds for various personal matters.

In comparison, a traditional personal loan will have a set amount that is predetermined as you become qualified. In essence, this is just one example of added flexibility associated with credit union loans.

Credit union loans for non-members, if available, will most likely be set up the same as a traditional personal loan. If you’re not a member of a credit union and have no intention of becoming one, you’ll want to compare credit union loan quotes with banks and even online lenders.

While choosing between a credit union vs. online lender, you’ll want to consider the availability and intimacy of the loan and customer service.

You’ll likely be able to walk into a credit union while you’ll rely on calls or emails with an online lender. This is a matter of preference.

Keep in mind that credit unions do have many flexible options, including payday alternative loans. These loans offer union members cash in advance of a paycheck to assist with small unexpected expenses like vehicle repairs.

How much does a credit union loan cost?

Like most investments and loans, credit union loans are subject to market changes overall. These loans can still have fixed rates, but to be transparent, the standard rates might change over time.

As of current, credit union loans tend to be at least half a percent cheaper than personal loans from banks. Personal loans, even from credit unions, will vary based on your credit, the loan amount, the loan security, and more.

Sample Credit Union Loan Rates
Credit UnionCurrent Loan Rates
Achieva Credit Union2.99% and Up
Alliant Credit Union6.24-10.24%
First Federal Credit Union3.25-12.5%
Florida Credit Union2.49-17.99%
Tyndall Credit Union3.24-7.24%
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The sample rates above include rates from providers for personal loans and a home equity line of credit. In short, you can get an unsecured personal loan at a much higher interest rate than a secured personal loan.

A home equity line of credit provides the credit union with some security so that they can confidently offer you a better rate. If you are unable to pay your loan back, the credit union will basically own some or all of your home.

Credit unions provide almost any type of loan, so the above rates do not include rates for auto loans, mortgages, or other loans. Mortgage loans make up over 50% of all credit union loans, according to the National Credit Union Administration.

You can anticipate notable variance in interest rates between loan types. Credit union loan rates vary by the credit union, loan type, and your credit history.

What are the best credit union loan alternatives?

It’s clear that a credit union can more than likely offer you a loan with a competitive interest rate. However, affordable credit union loans are usually only available for members. What happens if you can’t join a credit union?

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If you can’t join a credit union, you’ll still want to do your due diligence and compare loan rates from different lenders. There are some other options such as co-signed or joint personal loans.

Any co-signed loan, especially if your co-signer has strong credit, will be more affordable than without a co-signer. This is especially true if you have bad credit or limited credit history.

Most notably, high school graduates looking to attend college could save big on interest by finding a suitable cosigner for a student loan.

Credit Union Loans: The Bottom Line

Comparing credit union loans to traditional bank loans almost always falls in favor of credit unions. Credit union members can oftentimes find various loan types with competitive interest rates that aren’t available to non-members.

By now, you should understand whether or not credit union loans are right for you. Before you go, enter your ZIP to get free loan quotes from top lenders near you.