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Credit unions are not-for-profit cooperatives owned by their members. Because surplus is returned as lower rates and fees rather than paid to shareholders, their personal loans are frequently cheaper than comparable bank or online offers, especially for borrowers with fair credit.
Why credit union loans often cost less
Payday alternative loans (PALs)
| Feature | PAL I | PAL II |
|---|---|---|
| Amount | $200 – $1,000 | Up to $2,000 |
| Term | 1 – 6 months | 1 – 12 months |
| Membership | At least one month | No minimum |
| Application fee | Capped at a small amount | Capped at a small amount |
| Rollovers | Not permitted | Not permitted |
PALs exist to replace payday loans; our small-dollar loan comparison shows the cost difference.
How to join a credit union
- Live, work, worship or study in the union’s area
- Work for a partner employer or belong to a partner association
- Have a family member who is already a member
- Join an affiliated charity or association for a small one-time fee (many unions allow this)
- Open a savings account with a minimum deposit, often $5 to $25
Applying for a loan
Most unions accept online applications, and many allow you to join and apply in one session. Decisions can take a few days. Have the documents in our eligibility guide ready, and compare the quoted APR with other offers using our comparison guide.
Trade-offs
Branch networks and apps can be smaller than large banks’, funding may be slower than online lenders, and some unions have conservative approval standards for very recent members. For most borrowers these are minor compared with the saving on rate.
Frequently asked questions
Part of our complete guide to personal loan options.
Independent educational content. Not affiliated with any lender. Not financial advice; terms vary by lender, location and applicant.
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