Loan & Credit Cards

6 Reasons Why Credit Unions are Best for Personal Loans

Credit Unions are best for personal loans

Sometimes life gets the better of us.  And while there may be a whole range of reasons why you may need a little more cash, you are not alone.  Look around, and you will find many in the same boat as you searching for the best personal loans.

There are several institutions that you can go to to get a loan- the bank being the first place that pops into your mind.  But it may be better to go to a credit union instead.

What is a Credit Union?

It is a financial institution that is owned and controlled by its members.  They pool their deposits and provide loans and services to each other, especially if someone needs help to meet current financial needs.

Usually, you need to put down collateral to take out a loan; with a mortgage, it’s your home, and with auto-finance, it’s your car.  But with a personal loan, you do not need to pledge any security, and as long as you have borrowed it for a legal reason, you can do just about anything with it.

Many believe that credit unions are like banks, but they are non-profit organizations that are owned by members.  Their primary objective is to provide financial benefits and services, not to make money.

So if you are out in the market for personal loans, Houston TX, here are reasons why a local credit union may the best place to go.

Benefits of Credit Union Personal Loans

You’re a member

You’re not just a customer like at a bank, but a member of a collective community or workplace, for example, employees in a firm.  There is usually a membership criterion, that is, any characteristic that you share with all other members, such as where you live or work.  However, anyone can join.  To become an affiliate and avail all that the union has to offer, you must pay a fee.  This typically costs between $5 -$25, not to mention the additional minimum deposit required to open an account.

Easier approval in some cases

Credit unions are run by its members, so they are meant to help you, even if you do not have a good credit score.  That is why your loan is more likely to be approved when you borrow from them.  Some unions help their members to build a credit reputation by letting them borrow small amounts, anywhere between $500 and $3000, for terms up to 24 months.  A history of borrowing and repaying loans will improve credit ratings.  It will assist them in applying for a larger loan later on.

Lower interest rates

A credit union will give you lower interest rates than a traditional bank because their aim is not to maximize revenue.  Depending on your financial situation and personal credit, they can give you a better rate for a loan than the competitors.

Lower fees

Most services, including personal loans, are available at lower prices through credit unions.  They prefer to pass on savings to their members.  Therefore, they typically cut back on the expense of loans by omitting extra charges such as prepayment or origination fees.  So you get to save both ways- through discounted interest rates as well as lower fees.

Better customer service

Because credit unions are often from your locality, obtaining a personal loan can be easier.  And since they tend to be smaller in size when compared to banks, you’ll get better customer service too.  And because all customers are members, the interactions are more personal and more focused on providing the finance that you need.

Better ATM and credit card facilities

Credit unions have numerous branches and ATM locations.  Banks usually charge a fee for using an ATM, but most unions don’t.   With a credit union ATM card, you can withdraw money from your account without a fee, as long as it is a participating ATM.  The credit cards that credit unions offer are like those provided by banks.  However, the unions have lower APR rates.  So, using any card through the C/U has great fringe benefits.

So, if you’ve been contemplating about applying for a personal loan, get a quote from a local credit union first.  It may be the only option for those who have a poor credit rating or for those who are searching for the lowest interest rates.  It is advisable to ask a representative at the credit union for assistance.  Remember to inquire about the requirements before applying.  And make sure to read all the fine print before signing the agreement.

About Michelle Joe

Michelle Joe is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences, and express herself through her blogs. Currently, she is associated with Federal Credit Union Team.
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