Is it better to get a loan through a bank or credit union?
Credit unions tend to offer lower rates and fees as well as more personalized customer service. However, banks may offer more variety in loans and other financial products and may have larger networks that can make banking more convenient.
On one hand, as they are not-for-profit institutions, credit unions are better able to charge lower interest rates on loans than for-profit banks. On the other hand, credit unions typically aren't able to provide higher loan amounts than the larger banks.
Because of their nonprofit nature, a credit union may be more willing to accept riskier borrowers or offer better borrowing terms than banks and finance companies can.
Payment history is weighed the most heavily in determining your credit score, along with your total outstanding debt. Generally, borrowers need a credit score of at least 610 to 640 to even qualify for a personal loan. To qualify for a lender's lowest interest rate, borrowers typically need a score of at least 800.
Comparing banks vs.
Since the process of getting a bank loan is more rigorous, banks are typically able to offer lower interest rates and sometimes provide perks for existing customers. Online lenders are less regulated than banks, allowing faster application processes and more lenient eligibility requirements.
- SoFi – Best for High Loan Amounts.
- LightStream – Best for Low Interest Rates.
- LendingPoint – Best for Fast Funding & Below-Average Credit.
- Upgrade – Best for Bad Credit.
- Universal Credit – Best for Comparing Multiple Offers.
- Discover – Best for No Interest If Repaid Within 30 Days.
Eligibility requirements for personal loans from credit unions are less strict than a bank's criteria. In particular, a low credit score may not disqualify you from a loan with a credit union, because a credit union is more likely to take into account your overall financial circ*mstances.
In general, lenders extend $30,000 loans to borrowers with good to excellent credit, which is typically 670 and higher. But there may be lenders who lend to borrowers with bad credit. If you're having difficulty qualifying, you may consider getting a cosigner or co-borrower to help you get approved for the loan.
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
Credit Unions
As with banks, it usually takes one to seven days to receive funds after approval. Approval itself is typically offered on the same day you apply, as long as you fit all of the requirements.
What is the easiest loan to get approved for?
The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory due to outrageously high interest rates and fees.
To increase your chance of qualifying for a $10,000 unsecured loan, you should have a credit score of 600 or higher. Some lenders start their minimum credit score requirements at 600, however, there are some lenders that require a credit score in the high 600s or low 700s.
Requirements for a $20,000 Personal Loan
Requirements vary by lender, but most lenders require borrowers to have a credit score in the good to excellent range — meaning a score of at least 670.
The Bottom Line
Consider whether an online or in-person application is best for your personal situation. The good news is that there isn't a right or wrong answer. Online applications can offer quick approval and can be filled out at any time, while in-person applications provide more personalized guidance.
Having a positive and long-standing relationship with your bank may improve your odds of getting approved for a loan with competitive terms. Getting a loan from your bank might also make the account easier to manage.
The easiest banks to get a personal loan from are USAA and Wells Fargo. USAA does not disclose a minimum credit score requirement, but their website indicates they consider people with scores below 640, so even people with bad credit may be able to qualify.
Credit unions are not-for-profit financial institutions, which allows them to offer competitive rates and low fees on personal loans. Personal loans from member-owned credit unions typically offer more favorable borrowing terms than for-profit banks.
Many give preference to borrowers with good or excellent credit scores (690 and above), but some lenders accept borrowers with bad credit (a score below 630). The typical minimum credit score to qualify for a personal loan is 560 to 660, according to lenders surveyed by NerdWallet.
In general, people who have a FICO® Score 8 or FICO® Score 9 of at least 670 or a VantageScore 3.0 or VantageScore 4.0 of at least 661 are considered to have good credit or excellent credit, which means they may find it easier to qualify for a personal loan.
Hard inquiry on your credit: Due to the hard credit check, you will likely see a short-term drop in your credit score when you formally apply for the loan. While this may not be detrimental to your long-term credit score, it could cause some harm to your credit if you apply for multiple loans in a short time.
Why is it easier to get a loan from a credit union?
In addition, credit union members are able to vote in policies and make decisions that are more friendly to borrowers. This means your credit union loan approval odds are often more favorable than they would be if you choose to work with a larger, more impersonal lender.
The more you make and the more regular your income is, the easier it is for the lender to approve your loan. Some, but not all, lenders allow you to get a co-signer, which may help boost the amount you're approved for. Collateral: Although most personal loans are unsecured, some lenders may offer secured options.
The monthly payment on a $30,000 loan ranges from $410 to $3,014, depending on the APR and how long the loan lasts. For example, if you take out a $30,000 loan for one year with an APR of 36%, your monthly payment will be $3,014.
| Loan Amount | Loan Term (Years) | Estimated Fixed Monthly Payment* |
|---|---|---|
| $20,000 | 5 | $415.07 |
| $25,000 | 3 | $771.81 |
| $25,000 | 5 | $514.57 |
| $30,000 | 3 | $926.18 |
You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
