Consumers Are Continuing To Join Credit Unions For Loans and Banking Deals

What began as a result of the 2008 economic crisis which put a huge spotlight on too big to fail banks has continued at record pace as consumers are continuing to leave banks and join credit unions. More consumers are finding it easier to obtain loans and avoid many of the fees, and lots of credit unions are offering great promotions to attract new customers. For example during the holidays, short term loans are a major hot-button for millions of borrowers, and now more than ever they are turning to credit unions to obtain these unsecured loans. If you need a loan of less than $20,000 or so you should probably look into getting it from a credit union. Because credit unions are non-profits and focus on serving their members, they will normally offer lower rates of interest and loan terms that are adapted to your particular situation.

A credit union will only lend to its members, and there are always some restrictions on membership. Many of them are only open to employees of a certain company, or members of a certain trade union. However, there are others that are open to everyone in a certain geographic area. Sometimes credit unions will offer memberships to churches and other community groups.

The least expensive personal loan is the share secured loan, which uses your deposits as collateral. When you make a deposit in a credit union account, the money is considered to be a share in the union. If you have $3000 in savings, then you have 3000 shares in your savings account.

When you take out a share secured loan you are using your savings as collateral. Suppose one of your children needs braces. Instead of emptying your savings account, you decide to borrow against it. Your $3000 stays in the credit union and continues to earn interest. At the same time you borrow $3000 at an attractive rate.

The amount in your account must be at least as high as the amount of the loan. At the beginning, when you owe $3000 you must also have $3000 in your account. As you pay the loan down, the amount you owe decreases and so does the amount you need to maintain as collateral. When you have paid off $500 of your loan, you can also withdraw $500 from your savings account.

A signature loan is simpler, but also more costly.
A signature loan is backed only by your signature with no collateral. Signature loans are usually available for up to $15,000 or $20,000. The maximum length of the loan is normally five years although you can take out a shorter loan. Credit unions never penalize you if you pre-pay the loan.

Some credit unions will let you use your car, boat or even farm equipment as collateral, so they can give you a lower rate. This is an option you won’t find at a bank. You may also find special loans to help you build up or repair your credit rating, as well as low interest loans for special purposes like making energy-saving improvements to your house.

Naturally the credit union must consider your income, assets and credit rating before they decide whether to loan you money. Credit unions don’t make profits, but they can’t afford to lose money, either.