You can get a personal bank loan from the credit union―often at lower rates and with fewer fees than loans from big banks. This will make these financing options appealing to many borrowers. However, you need to move back and consider the potential drawbacks along with the positives before joining a credit union and submitting an application.
Benefits of Getting a Personal Loan From the Credit Union
As not-for-profit membership institutions, credit unions can offer their visitors terms the public can't get. When you are getting an unsecured loan from a credit union, get ready to enjoy benefits for example:
- Better rates and terms: Due for their not-for-profit structure, credit unions can usually offer better rates and terms to their clients than they might find elsewhere.
- Access to some number of unsecured loans: Credit unions offer unique types of unsecured loans, such as payday alternative loans (PAL). While PAL loans offer quick turnaround like typical payday loans, the rates and terms from PALs are much more consumer-friendly.
Drawbacks of having an unsecured loan From the Credit Union
Obviously, there might be some disadvantages in choosing a credit union as your loan company. These include:
- Membership requirements: To get a personal bank loan from the credit union, you have to become a member. Some lending institutions may limit membership to a particular groups (such as people in a labor union or the military), but often you can now join. Though this may be a simple, low-cost option, it is an extra step in your loan application. This may also come with a one-time fee of $5 to $25.
- Limited branches: If you are expecting to handle any of your loan application personally, lending institutions with limited branches and locations might not be able to provide the service you require.
Should I recieve a Personal Loan From a Bank or a Bank?
When deciding whether or not to take a personal bank loan from the bank or from the bank, there are some key differences to consider that distinguish the banking institutions from one another.
| Credit Unions vs. Banks | |
|---|---|
| Credit Union | Bank |
| Not to make money | For profit |
| Membership required | Open to any customer |
| May have lower rates on loans | May have higher rates on loans |
| May have fewer branches, and become contained in fewer geographic regions | Large traditional banks may have a national presence and many branches; online banks may have no branches and online-only services |
Both credit unions and banks offer general consumer financial options like checking accounts, savings accounts, home loans, charge cards, automotive loans and much more. But how these institutions are structured varies.
Credit unions are not-for-profit institutions owned collectively by account holders who must become members to make use of the loan union's services. Credit unions in many cases are able to offer members a far more personalized experience with better rates in contrast to big banks.
Banks, on the other hand, are for-profit businesses open to any customer. Their rates are usually higher, but larger entities might be able to provide a wider range of products and services. Larger, traditional banks may have many branches and ATM locations, while online lenders typically don't offer in-person services.
If you're looking for lower rates and do not mind paying a preliminary, low cost for membership, getting a personal bank loan from a bank might be best for you.
Conversely, if you wish to work with a larger institution that could offer more services, or perhaps an online-only bank that may provide faster funding, an unsecured loan from the bank may be more in your sweet zone.
How to Get a Personal bank loan From a Credit Union
To get a personal loan from the credit union, take these steps:
- Become a member. You have to be part of a bank before taking out a loan. Some lending institutions were founded for members of specific groups, but there may be methods to join even these lending institutions. For example, the NASA Federal Credit Union permits anyone to join if they become a member of the nation's Space Society having a complimentary one-year membership. If you aren't sure where to start your research, you should use the loan Union National Association's locator tool.
- Apply for the loan. Like every other lender, credit unions require applications to obtain a personal bank loan. This may include requests for information to verify your identity, income and address.
What to Consider When Going for a Loan From the Credit Union
When you're considering applying to a credit union for any personal loan, make sure you have met their membership requirements and therefore are happy with their locations and services before providing an official application.
Also, monitor your credit with Experian's free credit monitoring within the months prior to applying for an unsecured loan. It will help spot and remedy any issues with your credit report that could allow it to be not as likely to get approved.