Loans from credit unions are among the most attractive loans available. Generally, these loans offer lower interest rates and are looked at on more of a case by case basis, as opposed to traditional banks which sort through hundreds if not thousands of loan applications, every single day. If you need to borrow money, it is worth taking some time and doing some research into your local credit union as you shop around to ensure that you get the best deal possible.
The good news is that the process of getting a loan from a credit union is straightforward:
If you have never used a credit union before, like many people, you may not know much about them. While yes, there are a number of similarities between credit unions and more traditional banks, one major is the ownership. Many people do not realize that credit unions are actually owned by their customers. Most credit unions operate with the goal of providing financial services to their member-owners. Because of this credit union loan rates often come out to be a little bit lower than larger banks.
Prior to applying for a loan, you have to become a ‘member’ or a partial owner of the credit union (don’t stress about it, becoming a member is not as complicated as it sounds).
To become a member of a credit union, you will have to qualify by meeting certain criteria. That usually means you share some characteristics with other members, these might include where you live, or the industry that you or your family members work in.
No matter who you are, there is a good chance that you can join a credit union, and you may be surprised at how easy it is to qualify.
To find out which credit unions are available in your area, take some time to check out the National Credit Union Administration’s credit union search tool. If you are unable to find anything local, plenty of credit unions accept members from all over the country.
Once you have found a credit union that you are eligible to join, you will become a member by opening an account and making a small deposit – often less than $50. After that, you are ready and able to apply for a loan.
At this point, it is important that you speak with a loan officer at your credit union to understand the types of loans available and ask about the basic requirements for getting your loan approved.
While it is true that the actual process varies from place to place, but most credit unions have the same requirement as other lenders, these include, but are not limited to:
You will need to fill out an application, either online or on paper.
On the application, you’ll need to provide identifying information about yourself, such as a Social Security Number, date of birth, address and contact information.
You will need income to repay the loan, and you’ll need to tell the credit union how much you owe. Your monthly payments on all debts will need to be below a certain debt to income ratio in order to ensure that you can afford to make your payments.
If you’re buying a home or automobile, you’ll need to make some sort of down payment.
A history of borrowing and repaying loans will help you get approved. Your credit score is often used to judge creditworthiness – although with credit unions you often have the opportunity to discuss any financial concerns or questions with a professional. Because loans are often decided upon “in-house,” you can sometimes plead your case or explain why your application or credit report is the way it is, and how you are remedying the situation.
Once you apply, a loan officer will review your application to see if you qualify for the loan.
As briefly described before, even if you do not have a perfect history of repaying loans. There is a chance that you still might get approved for a loan. This is especially at small, community institutions. In this situation, there is a chance that you can speak with staff, who will review your credit reports and your personal situation. Remember that this is something that will never happen at a big bank. At traditional banks there is no debate or conversation with a loan officer – regardless of your situation or credit score, the computer will decide everything.
A long-term relationship with a credit union (and getting to know the staff) can improve your chances even more. If they see that you are managing your accounts well, they’re more likely to overlook a previous blemish on your credit report.
A secured loan can also help you get approved. To get a secured loan, you have to make a deposit or have some sort of collateral (which is money already in your account).
A cosigner can also help you get approved. A cosigner is a person who signs an application for you. It is important for anyone considering co-signing a loan that they take on the responsibility of payments should you default on the loan. A co-signer should have stronger credit than you and additional income available to pay off the loan.
Getting a loan from a credit union can be a very quick process. At some credit union branches, you can often get an answer on the same day, and funds could be made available that day or shortly after.
In some cases, yes, it can take longer. Credit union employees have a lot to do, and they cannot hand out money until they have had a chance to evaluate every loan. Plan, and ask your lender how long you should expect to wait to find out the credit unions answer.