Applying for loans is a tedious task. There’s a lot of options to choose from and you have to find the right financial institution that can give you what you need. You’ll also have to go through the application process and patiently wait for approval. If you want to apply for a personal loan, your best option is a credit union.
What is a Credit Union?
A credit union is a cooperative institution formed by members who also control it. All members have equal contributions, and they don’t operate for profit. The same community members usually create them, and they’re either large with thousands of members or small with only a few hundred. But, why should you consider getting a loan from a credit union? Check out the reasons below:
1) A Not-for-Profit Organization
Other financial institutions such as banks and online lenders operate because they want to profit. Check out credit unions, such as https://www.empowerfcu.com because they work to serve and care for their members. their goal is to provide high earnings but keep the interest rate of loans low.
The profits of large banks usually go to the company itself as well as the executives. The financial well-being of its loaners is not the top priority, which is why the interest rates of the loans are high. In a credit union, the profits and benefits all go to the members.
2) Formed By the Community
Members of the same community form credit unions. Those members have something in common like living in the same neighborhood, being in the same work or social group, or being church members. It’s like there’s one thing that ties them all to each other because they share a common ground.
What’s great about this is trust is easily found. Because you already have some affiliation with every member, you’re more at ease in trusting them with your finances. Credit unions are also most likely to offer specialized loans that cater to the need of every member, which you don’t usually get in banks.
Let’s say you want to get a car loan. The difference of what you’ll experience between a bank and a credit union is:
- More understanding when it comes to reasons why you had financial problems in the past.
- Lower interest rates.
- You can choose not to pay a down payment, but if you do pay, your interest rate will also decrease.
- More flexible when it comes to payment terms.
- If you don’t have a good credit score, you might find it difficult to gain approval.
- You’ll also have to pay high interest rates.
- You’re required to make a down payment.
- You have to complete the payment within five years.
3) Run by the Members
The executives run banks, and they also get the most benefits. They have the final say in the rules and terms, and you (the borrower) should play by those terms. In a credit union, the members run the cooperative. It means that if you’re a member, you have an equal say on important decisions.
When you’re the executive in your financial institution, it means you get the best benefits. And since members form credit unions, every one of them gets an equal share of the profits. But make sure you also contribute to the well-being of the whole group by participating in meetings, vote for the development of policies, and meet the needs of everyone.
4) You Also Help the Community
The community doesn’t just form credit unions, but they’re also there for the community. As mentioned, getting a loan from the bank is for the benefit of its executives. In a credit union, it’s benefits are for its members, as well as other people within the community who aren’t official members of the union.
How? Most credit unions offer financial education to help improve the financial literacy of each member of their community. They teach other people, especially students how to become smarter in handling their finances. They hold workshops or seminars to help them prepare for the future when they have to deal with lots of financial stuff.
When you need a loan, but you’re a bit scared of the high-interest rates of banks, consider a credit union. It’s a friendlier option than the cold world of banking because credit unions are people-centered. Your needs are the top priority, and you get a low-interest rate as much as possible.