Personal Loans from Credit Union
Why Personal Loans From Credit Unions Are Your Best Option
Interest rates on loans are rising everywhere, yet banks always get away with it. This leaves consumers with an even greater debt that will be harder to repay. Most think that they don’t have an option but to accept these rates since they have nowhere else to turn to other than banks. There are online lenders, but they usually charge much higher.
Those who think so might not have heard of credit unions, which have lower interest rates on loans and credit cards. There are other benefits to being a member of one as well.
Read on to see how getting loans from credit unions might be the better choice for you.
1. They’re Not-For-Profit
Credit unions exist not because they want to make profits off their members, but because they want to serve their members. The primary goal of this cooperative is to help members with financial services.
The profits they get don’t go to the pockets of shareholders. They trickle down back to the members in the form of more and better services, lower interest rates, higher dividends on deposits, etc.
For this reason, their services are genuine and not made to maximize profits. Promoting financial literacy is also a core mission of credit unions.
They’re a great source for information. They provide educational services like seminars and financial counseling.
They have vast resources that contain information on how to manage your money and credit cards better, as well as other articles and tools that will help members improve their financial decision-making skills.
2. Better Customer Service
Because their services are sincere, you can expect to get exceptional service every time. There is no hidden agenda. They sincerely want to help you as best as they can.
Credit unions are usually smaller than banks. With fewer members, employees can better focus on their needs and provide personalized services.
You can’t get this level of service at banks or even online lenders. With tons of people coming in every day, a bank employee might not even remember you the next day.
3. Better Accessibility
Do banks intimidate you? The environment can be suffocating as everything seems so formal and cold. The people there also seem to be putting on smiles to get you to sign up for their services.
They stick to the institution’s rules, and they don’t seem to care at all for an individual.
Credit unions are the opposite – with a friendly atmosphere, that is more accessible to every type of person. They employ a more personal approach to processing your loan instead of following a strict set of rules. Negotiating the loan terms is even possible.
Being a smaller institution allows them to better understand their members and neighborhoods. You know that your feedback will reach their ears. They’re approachable and receptive to ideas or criticisms.
As credit unions are everywhere, you’ll surely find one that will make you feel at home.
4. Lower Interest Rates
Because they not-for- profits, you’ll get loans with lower interest rates than banks and online lenders.
Of course, these types of financial institutions offer some benefits that you won’t find at credit unions, such as fast and easy online processing, but you won’t find interest rates as low as this anywhere.
Another reason why credit unions have less expensive loan programs is to get tax exemptions. To maintain this status, the law requires them to reinvest their profits into their services, which translates to lower interest rates.
You can get more than a loan as well. Even their credit cards have lower interest rates, but they may have fewer benefits than a bank’s.
5. Minimal Fees
Being a not-for-profit institution also allows them to be more flexible in fees. They typically charge minimal fees for their services. For example, most credit unions don’t have minimum balance requirements so members won’t have to worry about other fees.
Withdrawing at participating ATMs also comes without a fee as opposed to banks charging at least a couple of bucks with the use of their own ATMs. If you use an out of network ATM, certain fees can apply.
You can expect the same when you take out a loan. This doesn’t mean, however, that they don’t charge any fees at all. They can charge for an application fee on certain loan products, but they can’t charge more than $20.
Make sure to check what other fees you need to pay, like late payment fees, and how much they are. They’re still usually lower, but avoid them if you can to make the overall cost of borrowing even less.
6. They will talk to you, even if you have poor credit
Checked your FICO credit score and realized it’s too low to get a loan? A credit union may hold the solution for you.
Banks won’t normally approve applications with bad credit, or they’ll simply slap on a hefty interest rate. Many also turn to online lenders as they can entertain those with low credit scores, but they charge extravagant rates as well.
Credit unions won’t reject your application outright if you have a low credit score. They consider the overall picture and your standing as their member before deciding.
The interest rate will be higher than if you have a good credit score, but it will still be lower than what you’ll get from other institutions.
7. Different Loan Products
Credit unions may be smaller, but they offer a variety of financial products as well. They offer both secured and unsecured personal loans.
In secured loans from a credit union, you’ll have to make a deposit or provide a certificate of deposit to serve as a collateral. Different credit unions have different requirements, but they usually ask for 100% of the whole amount.
They will then freeze the account and unfreeze a portion as you make monthly payments until you pay off the loan. If you default on a loan, the money in the account will cover their losses.
Secured loans have the lowest interest rates. Unsecured personal loans don’t require a collateral. You can get these from banks as well, but your local credit union may have a better offer. Still, you’ll need a stable income to qualify.
8. They’re in a Co-Op Network
You’d think that a small financial institution would only have a few branches or ATM locations, but even the local credit unions have numerous machines. How so?
Most credit unions belong to a network that allows them to share ATMs. This then allows members to have the same easy access to cash that bank customers enjoy.
9. You’re a Member, Not a Customer
To banks, you’re either a customer or a product. To credit unions, you’re a member. Instead of being the source of money, you’re the one getting benefits by being a part of a credit union.
Members own the credit union, which means they each have one vote in electing the board members no matter how much money is in their deposit account. In banks, the number of owned shares dictates how many votes a stockholder has.
How to Get a Loan from a Credit Union
Credit unions may be the best option for you, but before you can apply, you must first meet the basic requirements.
Check the credit union’s website to see their eligibility requirements. There’s usually a one-time membership fee and a required deposit amount.
Some credit unions will allow you to take out a loan by being a member, but others may have a requirement that states you must build savings first. You might have to go to the branch personally to make the application, although some already allow online processing. Don’t worry too much about qualifying as a member. Almost everyone has access to a credit union.
You’ll then have to talk to a loan officer to begin the loan application process. They’re incredibly helpful, so don’t hesitate to ask what options are available for you. Make sure to ask your loan officer for the credit union personal loan requirements.
How You Can Make Payments for Loans from Credit Unions
The payment method depends on what the credit union offers. Most should offer easy methods, such as through a direct debit from your account or by having it taken from your paycheck through your Human Resources Department.
In some cases, you may have to deliver your payment to the branch directly.
Join a Credit Union
Want to join or get loans from credit unions? Contact us now and let’s discuss your options and the requirements you need.
Meanwhile, check out our blog for more financial tips.