Are you looking for an alternative for bank loans? Are you looking for some organisation that gives lower rates on loans? Do not worry; we have got you covered! Credit unions are what you have been looking for; Credit unions can provide you with lower rates for loans and much higher interest on savings.
In this article, we will be looking at what a Credit Union is. How to get a Credit Union membership? What is a Credit Union loan, how to get one and how to get a loan approved?
What are Credit Unions?
So, you got confused between a bank and a credit union? We understand why. Banks and credit unions are similar to a large extent.
- Credit unions are organisations that lend you money like a bank, but their interest rates are lower.
- The profit a Credit Union earns returns to its members.
- The people involved with Credit unions are called members and not clients as every member of the Credit Union has a part in it.
- A Credit Union is a non-profit organisation, and its primary goal is the welfare and providing financial help.
- In a bank, anyone can walk in and apply for a loan. Credit unions do not work like that; you can only be a member of the Credit Union and apply for a loan if you have something in common with the other Credit Union members.
How do I get a membership at a Credit Union?
- The first thing that determines if you will get a membership of a particular Credit Union is if you have something in common with other members of the Credit Union. You may belong to the same area, go to the same Church or work in the same field; it can be anything that the Credit Union approves of to become a member.
- The next thing you need to do is find a Credit Union in your locality or wherever you find it comfortable to have frequent visits.
- Now the final step, after choosing a Credit Union, is to make an account, become a member and deposit a minimum amount of money and you are all set!
What are Credit Union loans?
- In simple words, Credit Union loans are largely similar to bank loans. Unlike bank loans, Credit Unions do not give loans to everyone; it has specific criteria that you need to meet for getting approved for a loan.
- Credit Union loans are readily available, have low-interest rates, and if the Credit Union generates any profits, it will return it to its members at lowered interest rates.
- Credit Unions will evaluate your loans with an emotional perspective, unlike banks.
How do I get a loan from a Credit Union?
As discussed above, you need to meet specific criteria to be a member of the Credit Union and apply for a loan.
You need to go through a simple application for a loan like a bank.
- Application: As you would do for a regular bank loan, you have to fill out an application online or on paper.
- Identification: For security reasons, you will be asked for identification information of yourself.
- Employment: Another criterion for applying for a loan at a Credit Union is having had your current job for a specific period.
- Income: Since you need to repay the loan, you will have to provide the Credit Union with enough information about your current income and any ongoing debts. Doing this will help you with the amount you will need to pay per month; it will be based on your debt-to-income ratio.
- Down payment: If you plan to use the Credit Union loan to buy an expensive item such as a house or vehicle, you will have to pay a certain amount as a down payment. This will also depend upon the amount of loan and the cost of the item.
- Creditworthiness: In the end, your reputation with loans will be evaluated. Suppose you have a clean record of taking and paying back loans on time.
How do I get approved for a Credit Union loan?
After you have applied for a Credit Union loan, you may wait for your loan to be approved after you have met all the criteria for doing so.
An officer of the Credit Union will do this work of approval. Though you do not have a clean record of paying back your loans, having a good relationship with the members of the Credit Union could get your loan approved.
As said before, Credit Union also evaluates your loans emotionally, so feel free to confess or send a letter informing you about the problems you are going through.
Another way you could get your loan approved is by giving collateral; this also increases your credit score. Collaterals often seem scary to people as they need to keep houses, jewellery or vehicles as collaterals.
But this is not a problem here; the money held in your account can be used as collateral.
One more way you could get a loan is to get a person to sign with you for the loan. This person must have an excellent credit score and enough money to pay off your debt.
This does not mean that they are the ones to make the payments, but if you stop making payments, the other person will be held responsible for paying the remaining loan.
A Credit Union is no less than a bank, but the perks are that it provides you loans at lower interest rates, and if the Credit Union generates any profit, it returns it to the members of the Credit Union.
Just anyone cannot walk into a Credit Union and ask for a loan, you need to be a member of the Credit Union, and for being a member, you must meet specific criteria. This can be anything you have in common with the Credit Union members.
To get a loan, you need to go through a small filling out of applications, providing enough authentic information about yourself, your income and debt status. The final thing you need to do is wait for your loan to get approved by an officer of the Credit Union.
Credit Unions also evaluate your loans emotionally, so you may talk to the members or send a letter to tell them about your situation and why you need a loan.