Borrowing Money from a Credit Union: What You Should Know
A credit union can be a great place to go when you need to borrow money quickly because of their low interest rates and flexible terms. It is important to learn as much as possible about these financial institutions before going out and getting a loan. The more you learn about credit unions, the better of a position you will be in when it comes to borrowing money. Whether you need a mortgage or a small personal loan, this is one option that you should explore.
What are Credit Unions?
A credit union is established by communities with members who typically all live in the same geographic area. Sometimes all of the members of a credit union belong to the same trade. Any profits that a credit union makes go towards benefiting the members. These days most credit unions offer online and mobile banking options.
Becoming a Member of a Credit Union
When you are trying to find the right credit union to join, you will need to look at some of the different ones in your area. It is important to choose a credit union that will meet your specific needs and requirements. We recommend that you go on the official ABCUL website to see what your options are like where you live.
You can simply submit your postcode to get a list of these financial institutions. A lot of credit unions allow people to stay members even though they aren’t fully active. In other words, you won’t have to maintain a minimum balance like you would with a bank.
Reasons to Join a Credit Union
There are plenty of different reasons to consider becoming a member of a credit union. It can be very beneficial when you need a loan. You will most likely be able to get a secured loan for a house or car at a lower interest rate than with a bank. These financial institutions typically do more to help their members than banks when it comes to saving. You also may be able to get help with certain types of financial issues.
You will never have to worry about a credit union giving money to you if they don’t think you can afford to pay it back. They are legitimate lenders that will look at your credit history, income and other things before giving you a loan. There is a maximum amount of interest that these places can charge their members, which is also nice.
What can I get from a Credit Union?
Most credit unions offer basic accounts for checking and savings like any ordinary bank. You will be required to pay a little over one pound each week, which goes towards the costs of your account. There are no late fees that you will have to deal with if you don’t pay the fee on time, but you must keep up with it to keep your account active.
Getting a Loan from a Credit Union
You can get a loan from a credit union for as little as fifty pounds all the way up to 3,000 pounds. This is one of the big draws of these financial institutions, as banks don’t typically give out such small loans. You could end up getting an interest rate of six percent each year, but the average is about twelve percent. This means a decent return on the loans you take out through a credit union.
One of the great things about getting a loan through a credit union is that the interest rate decreases the closer you get to paying it off. If you consistently make your payments on time, you won’t have to pay as much interest overall. If you are unable to get a loan from a big bank, this is an excellent alternative.
Loan Terms
If you get a secured personal loan from a credit union, you could have as long as ten years to pay back the money. This all depends on the amount of money that you borrow and what your credit is like. A lot of credit unions throughout the UK have started offering short-term loans that range from 100-500 pounds that must be paid back in two to four weeks. If you have some important expense you need to cover right away, this could be an option worth looking into.
Rates
The dividend rates that credit unions offer their members typically range from 1 to 3%. You should take the time to see what each of these credit unions in your area offers in terms of rates. This is very important information to get before you decide which place to sign up with. You could potentially get a rate as high as eight percent, though it is fairly uncommon.