Expanded Lesson
4 min read
Credit Union Loans: Do They Differ From Banks
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Banks and credit unions aren’t the same. They both offer banking services and different types of loans, but one option tends to be cheaper than the other. Credit unions offer competitive interest rates and more flexible terms with little to no lending fees, so you can keep more of what’s already yours. If you are in the market for a home, personal, auto or RV loan, discover why so many people choose credit unions over traditional banks.
Lesson Notes:
- Credit union loans typically come with competitive rates and more flexible lending terms compared to those offered by banks.
- Credit unions may be more likely to approve your loan application if you have a low credit score or have been turned away from other lenders.
- If you are looking to save money on your next auto, RV, personal or home loan, connect with your local credit union today.
LESSON CONTENTS
How Are Credit Union Loans Different from Bank Loans?
Credit union loans are similar to those offered by banks. Both are designed to help you reach your financial goals, whether that includes buying a house, a car, or consolidating your debt.
Lower Rates
Credit unions have competitive interest rates. Their loans often come with a lower annual percentage rate (APR), so you can pay off the principal amount as soon as possible.
Credit unions can offer these competitive rates because they have lower operating expenses compared to banks. They typically operate in and around the local community keeping their costs as low as possible. Credit unions are owned and controlled by the owner-members they serve. Instead of making a profit, they are designed to help members with their personal finances and benefit the local community, so everyone can achieve their dream of owning a car, recreational vehicle, or their first home.
Flexible Terms
Credit unions are here to help their neighbors achieve their financial goals, so these lenders are usually more willing to work with individuals with low credit scores and mixed financial histories.
When you apply for a loan at a credit union, dedicated lending specialists will take their time when evaluating your credit score. They will get to know you as a person, instead of just looking at your credit score, which can help increase your chances of getting approved. Credit unions are for people, not for profit.
Banks usually have set lending terms. They will look at your credit score, debt-to-income ratio, and other aspects of your application. If you do not meet these criteria, your loan application will likely be denied outright.
Different Types of Credit Union Loans
Credit unions have a variety of loan options for all of your life’s most important purchases. Most credit unions offer the following types of financial products and loans:
Auto Loans
Your local credit union can help you buy a car using an auto loan. They usually offer competitive interest rates, low to no fees, and more flexible lending terms, so you can start driving as soon as possible. The lender will ask about your plans for the car, so you can find the right make and model without taking on more debt than necessary.
RV Loans
Many credit unions also offer RV loans, so you can buy a recreational vehicle as soon as you have enough for a down payment. These vehicles are perfect for low-cost living and traveling around the country. Your local credit union will evaluate your application to help you find an RV that suits your budget and lifestyle.
Personal Loans
If you need a personal loan, you can get the money you need right away. Whether you’re looking to consolidate your debt, open a business, repair your home or move across the country, credit union personal loans have a variety of options based on your needs and budget. Member service representatives will never encourage you to take on a larger loan amount than you can afford.
Home and Mortgage
Nothing could be more exciting than buying your first home. The credit union will evaluate your application to make sure you can repay the home loan on time. Credit unions have great loan options for first-time homebuyers, so they can stop renting and start owning. Their knowledge of the local community and excellent customer service can help simplify the home buying process.
How to Get a Loan from a Credit Union
If you decide that you want to apply for a loan at your local credit union instead of a bank, here’s what you need to know:
- Shop around for the lowest interest rate in your community. Compare rates and terms from different lenders to make sure you’re getting the best possible deal.
- Most credit unions will pre-approve your application, so you can start shopping for a home, RV or car before you officially apply for a loan.
- Once you have an idea of how much you can borrow, it’s time to start filling out the official loan application. You can fill out the application in person at a branch near you or apply online using the credit union’s website. Contact your credit union for more information if you need help filling out the form. Once you’ve submitted your form and all required paperwork, the credit union may ask for additional information.
- If your application is approved, the credit union will send you money as soon as possible. If your application is denied, the credit union will explain why. You can use this information to improve your application to increase your chances of getting approved in the future.
Credit unions are here to help you save money on your next personal loan. Visit Ent Credit Union today to learn more!
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