All You Need to Know About Credit Unions

The Main Features of Credit Unions

- They can be small or large, with some having hundreds or thousands of participants.
- They are monitored by the Prudential Regulatory Authority as well as the Financial Conduct Authority.
- Savers and borrowers must be sharing a common bond.
- Non-profit basis runs them. For instance, they use the money that they make to reward members.

Objectives of credit unions

- Encourage their members to continue saving regularly.
- To offer commercial hard money loans at a low rate
- To assist the members that are in dire need of financial assistance and advice

Credit unions ensure that their members don’t take out on commercial hard money loans that they will be unable to pay by first evaluating their income, and sometimes the amount they have managed to save. There is also a limit on the interest charged on loans which are often 3% per month and 42.6% per year.

Borrowing via a credit merger

For those participants who need financial assistance at a more affordable rate, the money the union holds in saving and the current account is lent out to them.

Loans from Credit Unions

Before you are able to acquire loans from a credit union, you will first need to be a member and should have built savings. Most of these unions charge about 1% monthly interest as you continue paying off your loan.
There are no penalties or hidden fees when you make prompt loan repayments.
In case you die before repaying the loan, the balance will be paid for you because credit unions offer free lifetime insurance at no additional cost.
In cases where the credit unions will lend you money against something like your car or property, they can lend up to ten years. However, for an unsecured loan, they can borrow for up to five years. However, there are some credit unions which can give up to about 25 years for a secured loan.

How to borrow from a credit union

Because you must be a member of a credit union to borrow money, the first major step will be finding a credit merger that you can easily join and be a member.

Repaying your loan

There are several ways in which you can repay your loan. However many of these unions might don’t always offer all methods of repaying the loan. You can repay you loan through the following methods;
• By direct withdrawal from your account
• You can make payments face to face
• Through Paypoint. Several credit unions offer Paypoint cards that you can use in repaying at your local shops.
• Through direct payment from some of your benefits. Most credit unions take profit payments directly, subtract your monthly loan refund and then compensate you with the rest.
• From your salaries at a job. You can repay back your loan by having money taken straight out of your wages if your employer has links with the credit union.