Credit unions offer loans of up to $100,000, with an APR capped at 18%.

Credit unions offer loans with low APR and great terms for people with excellent credit.

People with bad credit can’t get a loan from a bank. However, credit unions fund people with bad credit. Their APR is capped at 18%, which is not bad at all. Some credit unions have payday loan alternatives, aped at 28%. Credit unions evaluate your real ability to repay the loan on time, by paying more attention to your income and debt to income ratio, than your credit score.

Pros:

Up to $100,000.

Very low APR for people with good credit scores.

Cheap APR, which is capped at 18%.

Flexible terms.

People with bad credit can qualify for a personal loan.

Payday loan alternatives for people with bad credit are capped at 28%.

Lower fees and better terms than banks, according to many studies.

You can be a member of both banks and credit unions.

Cons:

You have to become a member.

Most credit unions have fees.

Many credit unions are created by and for certain groups of people, such as employees of a certain company or residents of a certain town — and some are still fairly restrictive. This means that people who are not in these groups can’t apply for membership.

Hard credit pull. Be careful. Most online lenders perform a soft credit pull when you apply for a loan. Most credit unions perform a hard credit pull on the application process. This lowers your credit score. Tip: Call the credit union before you plan to apply, give them details on your financial situation, and ask your chances of getting approved. Apply only if you are almost sure that you meet their criteria. Don’t waste time and points from your credit score if you don’t meet their criteria.

Fewer products are available than banks.

PAL I vs. PAL II

As of December 2019, federally chartered credit unions can offer two types of payday alternative loans, known as PALs I and PALs II.

PALs I was the original type of payday alternative loan. According to the NCUA, these loans:

Are between $200 and $1,000.

Have a repayment term of 1 to 6 months.

Have an application fee of less than $20.

APR capped at 28%.

Require a person to be a credit union member for a month before getting one.

Are available up to three times in a rolling six-month period.

PALs II is the newer of the two loans. These loans have similar rules, with the following exceptions:

They can be any amount up to $2,000.

They have a minimum term of one month and a maximum term of 12 months.

They can be taken out immediately after a person establishes membership with the credit union.

A borrower can’t have both types of loans at the same time.

Facts about Credit Unions

According to the National Credit Union Administration, credit unions’ APR average was 8.95%, while banks’ APR average was 10.09.

Credit unions are national and local.

ElitePersonalFinance lists both of them.

Here are all local credit unions by state.

Here are the best national credit unions.

If you plan to search for a loan from credit unions, we highly recommend starting with SuperMoney. They are the best loan comparison site. Once you register with them, you will be matched with many online lenders, credit unions, and banks. In fact, they work with all big lenders in America. They can help you save time and find the best offer. Apply now and get offers in minutes!

You won’t receive any spam from them!

They don’t get a percentage from your loan. If you get a loan from them, they only get a small percentage from the lender, not from you, which means that your loan wouldn’t become more expensive.

ElitePersonalFinance found the best credit unions for personal loans of July 2025!