Most people are intrigued by credit unions but don’t actually know much about them. Essentially a credit union is a self-help co-operative where members collectively put their savings together to utilize credit with low interest rates and other benefits. In order to become a member, you will have to share a common bond with the other members. Each credit union is different, but some of these requirements include working in the same place and working for the same employer.
What is a Credit Union?
There are over 40,000 credit unions in 80 countries around the world. As community organizations run by and for members, there are several key features of credit unions. For example, they run on a non-profit basis. Instead of having shareholders, unions use money they make to reward members and improve services. Credit unions can be small, but they can also be large. Like banks, credit unions are regulated by the Prudential Regulatory Authority and the Financial Conduct Authority.
Each union has a common thread, but the rules are up to the organization. To get a loan from a credit union, you need to join first. Once you find one where you are eligible to become a member, you will be able to take advantage of the credit union’s benefits.
Credit Union Loans
The majority of credit union loans are for up to five or ten years. If your loan is secured against your property, you will typically have a longer period. Credit union loans are able to offer low interest rates that are cheaper than a lot of credit options. For example, loans from credit unions vary but the legal maximum is 3 percent per month. While this is relatively cheap compared to many bank rates, it comes with the responsibility of paying it back. If you don’t do so on time, the union will likely kick you out and take you to court to get their money back. Credit unions require a high amount of individual responsibility. If you mess it up, you’re out.
Why Choose a Credit Union?
Credit unions operate with three simple goals. One of which is to provide loans at low rates. Another is to encourage all of their members to save regularly. Finally, credit unions help members when they are in need of financial assistance.
Credit unions typically act in the best interest of its members and do their best to ensure that members don’t take out loans they can’t pay back. Credit unions assess income and determine if they will be able to pay the loan back in good time.
These things make credit unions good lenders because they are reliable and show scrutiny in the loans they approve. There are also no hidden charges and no penalties to pay the loan back early. Credit unions also include free life insurance at no extra cost. If you die before paying back a loan, the balance would be settled and no one will have to pay it for you. According to the site MoneyPug, which is used to find payday loans online, expanding credit unions has been suggested as an alternative to payday lenders.
Where to Start
The first thing you need to do is find the credit union that works for you. What do you need from a credit union? What kind of services will help you in the long-run? After becoming a member of the credit union, you may need to provide some form of identification and fill out the necessary paperwork. Once you have been approved for a loan, you will get your funds. Paying back the money can be done in person, directly from your bank account, through your wages, and services that allow paying back the loan when you use a specific card.
Whoever you are, credit unions can provide a cheap alternative to bank loans. Join a credit union today and you will have these advantages. It doesn’t matter what you need the loan for, you will be better off with a credit union. Do your research and find the union that is best for you, you won’t regret it. You will be taking advantage of their many benefits in no time.