Welcome to The Yukon Project. We bring the insider’s perspective on lenders and financial service providers in order to help you make the best decisions for your situation. In this article, we’re reviewing NFCU’s personal loans and debt consolidation loans.
Navy Federal Credit Union Background
Navy Federal Credit Union (NFCU) was established in 1933 with seven members. Now, it is the largest credit union in the world, with over 13 million members and nearly $168 billion in assets.
They offer the full range of financial services, including checking and savings accounts, credit cards, auto loans, student loans, mortgages, personal loans and more.
Unlike banks, credit unions are member-owned non-profits. That means that their incentive is to return value back to their members through lower fees, lower interest rates on loans, and higher interest on savings. Let’s see if that bears out on their debt consolidation loans.
Navy Federal Credit Union Membership Requirement
Before we jump into the personal loans & debt consolidation, let’s cover an important point about NFCU: membership is required. You are eligible to join NFCU if you are:
- Active duty, retired, or veteran of any branch of the U.S. Armed Forces
- Department of Defense employee or contractor
- Reservist
- Immediate family member of any of the above
In short, if you aren’t affiliated with the military or DoD, you probably aren’t eligible.
Navy Federal Debt Consolidation Loans
NFCU offers personal loans that you can use for any purpose, including debt consolidation.
How much can you borrow?
Their personal loans range from as little as $250 all the way up to $50,000. The amount they will lend to you will depend on your credit worthiness, which is a combination of your credit history, your income, and your current debts.
What is the interest rate on NFCU debt consolidation loans?
NFCU’s lowest stated APR is 8.99% and their highest is 18%. If you take a loan that has a term above 36 months, the lowest APR you can qualify for is 15.29%. Remember, APR stands for annual percentage rate. It represents the total yearly cost of borrowing the money, expressed as a percentage. This includes the interest rate plus unavoidable fees.
Speaking of fees, NFCU does not charge an origination fee on their personal loans. More on other fees below.
How long is the loan term?
You can take the loan for a term between 6 months and 5 years. Just remember, the longer you take to repay the money, the more interest you will pay – even if the rate is low. If you are consolidating debt, you want to get it paid off as quickly as possible.
What credit score do you need?
NFCU doesn’t state a minimum credit score to be approved. Based on the rates they are offering, their loans are likely best suited for people with good-to-excellent credit – think 670 and above.
That doesn’t mean you can’t get approved with a lower score. It just means the odds are lower and you’ll likely pay a higher rate.
Can you have a cosigner for a NFCU personal loan?
Yes, NFCU does allow cosigners on personal loans. A cosigner is someone who agrees to be responsible for the debt if you fail to pay. A cosigner with a strong credit profile and low debt-to-income ratio could help you get approved and secure a lower rate.
Secured vs Unsecured Loans
NFCU offers the choice between secured and unsecured personal loans. With a secured loan, you put up collateral – in this case a savings account or certificate of deposit with NFCU. The benefit is you may be able to borrow more, get a lower rate, or get approved when you otherwise wouldn’t. The downside is if you fail to repay, they can seize your collateral.
What fees are the on a NFCU personal loan?
An unsecured loan doesn’t require collateral, but will likely come with a higher rate since it is riskier for the lender.
We already mentioned NFCU doesn’t charge an origination fee. They don’t charge early repayment fees either. So feel free to pay your loan off early.
They do, however, charge a late fee. If you are late on a payment, they will charge you 5% of the monthly payment or $30, whichever is higher.
Behavioral finance side note: Research shows humans tend to underestimate the likelihood of rare negative events. If you think there is even a small chance you might have trouble making a payment, factor a couple late fees into the total cost of the loan. Better to overestimate than to get caught off guard.
Will NFCU pay my creditors directly?
No. If you are using the proceeds of the loan to consolidate other debts, NFCU will not pay your other creditors directly. They will deposit the money in your account and you will be responsible for paying off the other debts. Make sure you have a plan for following through and try to avoid the temptation to borrow more than the amount you need to pay off your other loans.
Should you get a debt consolidation loan from NFCU?
If you are eligible for membership and have good credit, NFCU is certainly worth considering for a debt consolidation loan. Their rates are competitive and they don’t charge origination fees which many other lenders do.
However, you should always, always shop around before committing to a loan. Every lender has their own criteria for determining creditworthiness, so the rate you are offered can vary significantly from one lender to the next.
One easy way to shop around is through our marketplace at the Yukon Project. With a single application, you can apply to up to 40 lenders without negatively impacting your credit score. It’s a great way to quickly see the options available to you and ensure you are getting the best deal for your situation.
Tips for Using a Debt Consolidation Loan
Before you sign on the dotted line for any debt consolidation loan, make sure you have a plan. Debt consolidation only makes sense if:
- The new loan has a significantly lower interest rate than the debts you are consolidating. Even a couple percentage points can make a huge difference over time.
- You plan to use the loan to pay off the other debts immediately. The goal is to use the new loan to get out of debt, not get deeper in debt.
- You have a budget that allows you to comfortably make the monthly payment on the new loan, and ideally pay extra. Remember, the faster you pay off the loan, the less interest you will pay over the life of the loan.
- You address the underlying issues that caused you to get into debt in the first place. Whether it’s overspending, unexpected expenses, or loss of income, have a plan for avoiding those pitfalls in the future.
Final Thoughts on NFCU personal loans
Navy Federal Credit Union offers compelling debt consolidation loans to eligible members. But they are just one option of many. Always do your due diligence, read the fine print, and choose the loan that makes the most sense for your financial health. And remember, we’re here to help at the Yukon Project.
