If you need money, you might be thinking of borrowing money from reputable lending institutions. And there are many options out there for borrowers to choose from, such as banks and various lending companies.
Another popular option that most borrowers consider is credit unions. However, not everyone has an idea of how exactly a credit union works or how to apply for a loan from it.
Credit unions share many similarities with banks. However, the key difference is ownership. Unlike in banks, credit union members are considered as part-owners. Furthermore, credit unions are considered not-for-profit organizations that help their members.
How to Become a Member
Credit unions are established to provide financial assistance to people. However, before you could apply for a credit union loan, you must first become a member/ part-owner.
To do that, you need to consider the following:
- Criteria: To become a member of a credit union, you must first qualify for the criteria they have set. This may mean that you should share some of the eligibility that other members possess. This may include what industry you work in or where do you live.
- Easy Ways: Some credit unions provide easy ways to become a member. For example, if you’re buying a car, some dealerships may sign you up to become a credit union member. In other words, by buying from that dealer, you may meet the credit union’s membership criteria.
- Finding a Credit Union: You can search online to find credit unions in your area. You could also try the credit union search tool provided by the National Credit Union Administration. If you can’t find a union near you, many credit unions accept members all over the US.
- Deposit: After meeting all the qualifications, you can now open an account. Credit unions will require you to make a deposit. After that, you can be set to apply for a loan.
How to Apply for a Loan
Most of the time, you can apply for credit union membership and loans simultaneously.
To make it less of a hassle, you should speak with a credit union loan officer. The loan officer will help you figure out the loans available for you and the process you have to undergo to get approved.
Common requirements to apply for a loan in a credit union are the following:
- Application
- Identification
- Employment
- Income
- Down payment
- Credit Score
After you apply for a loan, the loan officer will review your credentials and decide whether you qualify or not. There is a big chance you’ll get approved for a loan in credit unions even if you have debt problems in the past. However, if you think your odds of getting approved are low, it is best to talk with the staff or write a personal letter to the credit union. This will improve your approval rate.
Borrowing money from a credit union can be quick. However, in some cases, it can also take long since credit union employees can be busy. Hence, it is wise to ask the loan officer how long you have to wait to borrow the money you need.
Pros of Borrowing from Credit Unions
Since credit unions operate to aid their members’ financial problems, they tend to develop customer-friendly policies. This makes it accessible and easier for members to get a loan. Moreover, credit union employees are always willing to work with you if you are caught in a challenging financial situation.
Credit unions are known for loans that offer low rates and fees, leading to a low overall borrowing cost. The reason behind this is that credit unions are not focused on getting profit. They are more concerned about funding their operating costs instead.
Cons of Borrowing from Credit Unions
Unlike traditional banks, credit unions are smaller, which means that they offer fewer services and reach. It might be difficult for you to find a branch nearby or an ATM, especially when you are traveling or if they don’t have a branch in your area. Moreover, credit unions may not have the best banking technology there is. For this reason, online transactions for credit unions might be limited.
Large banks offer various options for their customers concerning credit cards, savings accounts, investment accounts, checking accounts, and loans. Moreover, the options tend to have high rewards. On the other hand, credit unions may offer only a few types of each with no rewards.
Besides traditional banks, some borrowers prefer installment loans for people with bad credit from online lenders compared to loans from credit unions. Many opt for them because of quick and easy loan approval.
Takeaway
Before you dive into the world of credit unions, it is vital to do your research. It is wise to consider borrowing from a credit union because they offer the most competitive loans. And second, credit unions are easy to find nationwide. However, it also carries some disadvantages. Hence, it would be best to think it through before deciding whether this is the right step for you.
