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Credit Union Loans – Is This A Viable Way To Get The Money You Need?

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If you are considering getting a loan but you find that through banks, online loans and credit cards you will have trouble due to a poor credit score you may still have an option available to you…

Credit union loans are loans that are administered by the local community, they will sometimes offer better rates than you would find at a bank, and you may find this to be the best option if you are having real trouble getting a loan by other means.

We will walk you through some key points to understand about credit union loans and the best place to get started if you want to pursue this as an option.

We will also let you know anything that you need to know to make sure that everything goes as smoothly as possible, and you have more of a chance of getting the money that you need.

What is a Credit Union loan?

You will find that these loans come from a credit union which is normally a community loans provide. You will find that most of them are non-profit financial organisations, and they are normally tied to people from the same town or that work in the same industry. This is why you will find that you might get a credit union for service people including the police force and the Fire Brigade.

The good news is that as times have changed you will find that credit unions are more assessable and most have a commercial residence so you are able to enquire about a loan that way, you will also find that some of the providers will be available online as well.

Who can get a credit union loan?

As a rule, you will find that credit union loans are offered to people that cannot get access to an ordinary loan from the bank. Another key point here is that some credit unions will allow access from people that are looking at different options, so even if you are not struggling financially and you are just looking for various options for your loan, they can be well worth looking into.

How much can I borrow?

A credit union works differently to a bank and most credit unions will only offer smaller amounts that are under £5000.

This again is due to helping people that cannot normally get the standard bank products. The only other way that you can get a loan with extremely bad credit is to either think about improving your credit score over time, considering a payday loan which will give you a huge amount of interest or borrow the money directly from friends or family. This is what makes credit union loans so appealing if you are having trouble getting a loan elsewhere.

What else can a credit union give me?

It is worth noting that most credit unions will also offer a saving account. The main difference between the banks and a credit union is that the interest rates will work a little bit differently and they will pay you a dividend on the funds, this is calculated by how well the credit union has done that year.

Can anyone join?

This is where the setback comes in with a credit union. The criteria to be able to join a credit union is normally to share a bond with the members. As we mentioned above, this may be that you have all served in the forces, police force, Fire Brigade etc…

This could also be that you are all from the same area.

It is very unlikely that you can join any credit union and you are best running a search online for your local credit union and starting there.

How to find a credit union?

To find your local credit union could not be easier. As you are online you will most likely be able to bring up the resources that you need by typing in “Where is my local credit union?”.

To make sure that everything is above board you should also check that any credit union is part of “The Association of British credit union Ltd”.

You can also find more information at your local citizens advice; they will be able to point you in the right direction to find your nearest credit union.

Another resource that you can use is the Find your credit union website, this will allow you to search over 380 unions that will allow you to compare and find the one that will suit you best.

You then will be able to review the list of return credit unions that you may be eligible to join, it will also help you as it gives you a common bond criterion. Then you simply click through to the credit union website, or you can call them.

Difference Between Credit Unions and the Bank?

The main thing to remember with a credit union is that they have been set up to help you take control of your money. They work a little bit differently to banks and they do not use the money to pay shareholders like a bank would.

You should also note that your money is safe as credit unions are unable to lend all of the member’s savings.

This means that you are protected in much the same way that you are with a bank due to the financial services compensation scheme.

Credit Union Loans and Rates:

The interest rates that you get will vary depending on the amount very much that you want to borrow, how long you want to borrow it for and the terms of the credit union that you borrow it from. You will find that you can get a lower rate in some cases from a credit union loan, some of these can be very good and give you a rate of around 8% to 20%.

This is why it may be well worth only borrowing a small amount of money from a credit union. You will find that as a rule the rates are higher than some other loans and also higher than some credit cards.

The main differences that although the rates are higher will find that they will be lower for you if you are having trouble getting a loan from the bank.

For instance:

If you are having trouble getting a loan from a bank or you are having trouble getting a credit card, then of course a credit union loan is well worth looking at.

Even if you find that you are able to get a loan from the bank, but the rate is very high, you could then try a credit union to see if you could get a lower rate than the bank offers.

All the while, if you do end up using the credit union you will know that your money is protected, and you will not run into any problems down the line.

Saving With A Credit Union:

As touched on above, one of the main benefits of a credit union is also the ability to get a saving account. This means that you will be able to save small amounts weekly and you can even save larger amounts.

The main difference with the rate that you will get by using a credit union is that they will give you a dividend rate rather than an interest rate. This means that you are essentially getting paid a percentage of the performance of the union, it also means that you will not know exactly how much you will get until the end of the year.

This is also a great way if you are having problems setting up a saving account with a bank. It does mean that in some cases you may get a very high percentage all of the way up to 6% but it could also be all the way down to 0%.

The main thing to do to make sure that you have the options available to you is to check out your local credit union, you can do so using this website.

That way you can see the terms that they will offer, and it will give you a better idea of what they will give in terms of savings as well.

Ease of access to your money?

The good news with a credit union loan or savings is that you will find it easy to get access to your money. This used to be a problem a number of years ago and would put people off using a credit union facility.

You should be able to pay any loan back at the local credit union office or in some cases you would be able to do it online through a post office.

If you wish to withdraw money you will normally be able to do so directly at the office or in some cases, you will find that you actually get a debit card just like a bank, so you have access to your money.

Final Thoughts:

If you do use a credit union for savings, after checking all of the above make sure that you have a look to see if you have any benefits that are available to you. Some will offer life savings insurance and that means that any savings you have can be increased by using this facility.

If you are thinking of using a credit union to get access to a loan, make sure that you follow these steps first:

1. Find Your Local Credit Union:

Taking into account everything that we have said above we highly recommend that you check out your local credit union. You can use this website; it will locate your local credit union down to the postcode and it will also let you know the finer details of savings accounts as well as any loan facilities available to you.

2. Think Carefully About Your Loan:

Think carefully about getting a loan, you should do this anyway no matter where you are getting the loan from. Bear in mind with a credit union loan you should only borrow a smaller amount of money and be prepared to pay a higher rate of interest then you would at the bank.

You essentially do not need to have bad credit to apply for a loan from a credit union, it is just that most people use this facility if they are unable to get a loan anywhere else.

3. Contact Them:

The benefits of a credit union are many, if in doubt make sure that you contact your local credit union so you can get the finer points of what is available to you. You may find a resource that you far prefer to banks, you also may find a resource that is far better for you in terms of savings and making your money work for you if you are unable to do so by other means.

We hope you have enjoyed this article that has helped you with credit union loans, credit union savings and given you an alternative to finding the money that you need.

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