A credit union is a form of financial institution like a bank that offers banking services. Unlike banks, however, credit unions are owned and run by their members. Some credit unions are small and serve individual neighbourhoods, but others have national coverage. To get financial services from a credit union, you have to become a member.
Like banks, credit unions provide many financial services, including personal loans. Loans from credit unions are often more advantageous in that they carry lower interest rates, allow smaller loan amounts, terms are more flexible and demands for approval relatively less stringent.
KEY TAKEAWAYS
- The personal loans offered by credit unions are lump sum loans that you repay in fixed, regular instalments.
- If you want to get a personal loan from a credit union, then you must also become a member of that credit union.
- Loans from banks or online lenders tend to have higher interest rates and fees than those found at credit unions.
- Credit unions usually take 1 to 10 working days to approve or reject a loan.
A Credit Union Personal Loan
The credit union has several advantages over banks. One advantage of using a credit union is that since credit unions are not run to make money, they can usually provide lower rates than commercial banks and online lenders. Some credit union users also prize the more personalized service that credit unions can provide for members.
However, to apply for its loans, you’ll first need to become a member of the credit union. Each credit union sets its own criteria for membership, but most now allow you to apply online. To open your membership you usually must make a small deposit (US $ 5 to US $ 25). Then, as a member, you can apply for a personal loan.
As it stands, a personal loan from a credit union functions in nearly the same way as one from a commercial bank. The credit union will appraise your application and determine whether to lend you the money. The first step in joining a credit union is to apply for membership. But since it takes high-quality credit or guaranteed employment (like military service) to raise the odds of getting approved, just becoming a member isn’t enough on its own.
Purposes
Whether your personal loan comes from a bank, credit union, or an online lender, you can use it for any number of reasons. Some lenders may ask what you plan to do with the money; others will just want to be sure that you can return. They are often used for:
- Debt consolidation
- Moving expenses
- Wedding expenses
- Funeral costs
- Unexpected expenses
- Medical bills
- Home repairs or renovations
- Vacation costs
But before getting a personal loan, you will want to make sure this is the right financing approach for you. First, given your circumstances, there may be cheaper ways for you to borrow money.
For, if you have home equity on which to base a home equity loan, your interest rate may be lower than before. Or a credit card with an introductory interest-free period would allow you free funding as long as you paid the money back before the period expired.
Why choose a personal loan
Here are some reasons:
- You require one sum of funding which you pay back in installments.
- You lack the assets to act as collateral for a lower-cost loan.
- Your little cheap borrowing choice is a personal loan.
What Are the Requirements for a Credit Union Personal Loan?
To get a personal loan from a credit union, you will first have to join the organization. However, each credit union has its own standard for being a member and you may not be eligible to join them all.
But there are various types of credit unions, and one should suit you. After joining, you can apply for a variety of financial products, from personal loans to insurance.
The eligibility requirements for a personal loan from a credit union are not as strict as those of the bank. This is especially true of credit unions, which tend to look at your overall financial situation and so a poor credit score may not prevent you from obtaining a loan. However, a high credit score will probably get you a lower interest rate.
Before applying for a personal loan, be sure to first check your credit score. But if the score is still too low for your liking and you can put off taking out a personal loan, then you can take steps to raise it. You could, for example, pay down part of your debt.
Credit Union Personal Loan: Application
The process of obtaining a personal loan from a credit union is not as simple as one might hope. First, you need to fill out the forms needed to join the credit union. Each credit union has its process and requirements for this. Now some will let you apply online.
Opening an account with a credit union might require a small deposit. After opening an account you can apply for a personal loan. Some credit unions will let you apply for a loan online. But others will need you to go to a credit union branch.
In the same way, each credit union will require different information to accompany your loan applications. That’s why you should be prepared to supply contact and personal information, employment, a Social Security number, and income details, and any debts you may already have.
The credit union will consider your application and then decide whether it is willing to lend how much money, at which interest rate and for how long. But this check may affect your credit score adversely for the next several months to one year, as a temporary, light negative.
What do people use personal loans for
From August 14 to September 15, 2023, we surveyed a national sample of 962 U.S. adults who had taken out personal loans with Investopedia to find out what they spent the funds on and how future borrowing might be used. Of all the reasons people borrowed money, debt consolidation was by far the most common, observed by big-ticket items and other home improvement:
Joining a Credit Union How
As to how one joins a credit union, the procedure differs from credit union to credit union, according to their procedures and requirements. Some credit unions will even let you apply online by filling in an application with all your personal information. Other people may ask you to go to a branch and apply.
Important Links
People May Also Ask
What is the lowest credit score for a personal loan from a credit union?
A personal loan’s minimum credit score will vary from one credit union to another. Some credit unions extend personal loans to applicants with a low credit score. However, the credit union will probably use other standards to ensure you can pay back the loan.
Are there fees for Credit Union Personal Loans?
Though credit unions charge fees, they tend to charge fewer and less expensive fees than banks do. Different credit unions have different policies about fees.
How much time does it take to get personal loan approval at a credit union?
After you become a credit union member and apply for a loan, it can take about 1-10 business working days until approval. How long it will take varies by credit union.
Conclusion
The least expensive way to borrow is often a personal loan, which you can get from several providers. Credit unions’ personal loans tend to have lower fees and interest rates than similar bank or online lender offerings.
The cons is that it is convenient. You will first have to join a credit union before you can borrow, and it may take a long time for the application to be approved.
