If you need to borrow money, then a local credit union could be a good option. These financial institutions offer their members some loan benefits that you won't always get from traditional banks.
What are the advantages of borrowing money from a credit union?
1. Get Lower Rates
Traditional banks and financial institutions typically charge higher loan interest rates than credit unions. Banks are profit-driven. They have to pay shareholders. So, their rates can be high especially if you don't have an impeccable credit history.
Credit unions are not-for-profit institutions. Their profits go back to their members in various ways. So, for example, if you save with a credit union, then you'll often earn more interest than you would get with a regular bank. Plus, when you borrow, credit union rates are usually lower.
If your interest rate is lower, then borrowing becomes more affordable. You'll pay back less interest over the life of your loan.
2. Improve Your Chances of Acceptance
If you have an impaired or bad credit history, then you might struggle to borrow from traditional financial institutions. If you can get a loan from a bank, they are likely to increase your interest rates to cover the risk you pose even if you can afford to pay regular repayment rates.
Credit unions take a more holistic view of your application and finances. For example, while they will run standard credit checks on you, many unions also look at the bigger picture.
So, your union might talk to you about your financial history and current circumstances. If they feel that you can repay the money without putting yourself under undue stress, then you're more likely to qualify for a loan at reasonable rates.
If you don't immediately qualify, then union staff can help you find ways to improve your finances and credit history. They work with you to get you into a stable borrowing position. You won't typically get this help or advice from a bank.
3. Avoid Future Borrowing Problems
If your finances aren't in great shape, and you can't get a loan from a traditional lender, then you might feel that you have no alternative but to apply for a short-term cash or payday loan. However, these loans often have sky-high rates and conditions that could damage your finances and credit history even more.
Some credit unions offer emergency loans or payday alternatives. You could raise cash fast without any of the downsides of using short-term cash companies.
For more information, contact a credit union near you.Share