Credit Union Loans

Credit Union Loans

They usually offer a much lower APR to Loans and are therefore seen as the preferred option. But what are Credit Unions?
Members deposit their money into an account, in much the same way as with a savings account. Before someone can take out a loan they must have saved a certain amount with the credit union.
Credit Unions are not for profit organisations. This explains why they can afford to charge such low interest rates. All members will have something in common (location, trade union etc). This means not everyone can get one.

What are the benefits of a Credit Union?

Credit Unions make decisions based on the interests of their members, and so will not lend to someone who cannot pay the loan back. Due to all people trying to take loans out with the Credit Union being a member, it is easy for the Credit Union to make affordability checks.
There is a maximum amount of interest on Credit Union loans and it is set at 3% per month. This is far below Short term Loans which characteristically charge 25% per month.
Members are offered advice and help when in financial trouble. This helps to stop the customer getting into difficulty again.
Unlike many lenders a Credit Union does not charge a fee for early repayment.

Getting a Loan with a Credit Union

Getting a Credit Union loan is not as straightforward as it is to get a personal loan. As previously stated it requires you to become a member of the Credit Union and show you can save money for a period of time.
Also, not everyone can join a Credit Union and there may not be one open to you in your area, profession or other stipulation.
Once you have membership to a Credit Union it still requires a number of months saving before you can take out a loan, so this option is not for people who require instant money.

Saving with a Credit Union

As previously stated you will need to join a Credit Union in order to get a loan. This will mean you will have a savings account and will need to put money away each month. This is how a Credit Union has money available to loan.

Other options

Whilst Credit Unions are often a cheaper alternative to say a short term loan, they do not provide instant cash, unless you are already a member. They also tend to be a more expensive offer than Personal Loans. Use UK Loans Comparison or Smarter search to see if you can find a cheaper loan.

Where can you find a Credit Union?

You can find your nearest credit union by visiting www.findyourcreditunion.co.uk or you can call the Association of British Credit Unions.

Taking out any form of credit comes with risks. Always weigh up the risks before borrowing, even from a Credit Union. If you feel like you need advice first, take a look at these sites:

https://www.nationaldebtline.org
Offering an online web chat service you can talk to someone immediately to discuss your options

http://www.stepchange.org/
The biggest debt help charity, with lots of experience in helping people struggling with debt

Use our award winning technology to search our panel of lenders for some of the most competitive rates.