Why Should You Choose a Credit Union to Take a Loan?
If you are looking for a loan and have come across the option of a credit union loan, you may wonder what a credit union is and what the benefits of borrowing from them are. Well, a credit union is an institution where people come together to save their money in pool so that they can run the institution and lend money to the needy. All credit unions provide savings as well as loan accounts, whereas certain (mostly larger) credit unions may also provide some other products and services.
Features of Credit Unions
- Those who save or borrow through a credit union typically should have something in common, such as same area of living, same workplace or same profession. Members of same trade union or church may also form a credit union.
- Credit unions are run on a non-profit basis. Rather than paying a profit to members (such as shareholders in a company), they distribute the money in the form of a reward to their members and use it for enhancing their services.
- Credit unions can be as large as having thousands of members or as small as having only a few members.
Why Should You Choose a Credit Union?
There are certain prominent benefits of choosing a credit union instead of a bank.
- Their rates of interest on loans are lower than banks
- They help needy members in the form of financial guidance and help
- They encourage members for regular saving
Credit unions typically act in favor of their members and therefore try to make sure that they don’t allow members to take loans they are unable to repay by evaluating their income and in certain cases, how much they have been able to save.
Taking a Loan from a Credit Union
The funds a credit union holds in current and savings accounts are lent to other members who are in need at an affordable interest rate.
Before you get a loan from a credit union, you should be their member and some may even require you to build up savings first. Thus, for taking New Mexico credit union loans, you’ll first have to become a member of a New Mexico credit union.
The benefit of taking a loan from a credit union is that they don’t have any hidden charges and also no penalties on early repayment of loans.
Another benefit is that they also include free life insurance. Thus if you die before repayment of loan, they will pay off the balance for you.
All in all, it’s beneficial to consider taking a loan from a credit union when you are really in need so that the loan won’t be hard on you.