There are many reasons to apply for a personal loan. You may want a single loan to consolidate existing credit card and other types of high-interest debt. You may want a loan to renovate part of your home, to go on vacation or to cover holiday expenses. When it comes to personal loans, it pays to shop around for the best interest rates and terms. Often, you’re likely to find that your local credit union is the best place to go to get a personal loan. Here’s why.
Friendly Service and Community Focus
Credit unions operate differently from banks. They are not-for-profit organizations that usually serve a specific community. Being a not-for-profit means that credit unions are focused more on helping their members than on answering to stockholders or trying to boost profits for the sole benefit of the bank. Any profit the credit union gets is returned to members.
Since credit unions usually have rules about who can join, they tend to be more invested in their communities and more committed to seeing the members of that community succeed than banks are. All of this isn’t to say that you won’t find friendly service at a bank. You’re just more likely to feel part of a community when you get a loan from a credit union.
Competitive Interest Rates
Since credit unions are not-for-profit, they typically offer better interest rates than banks. That means that personal loans from a credit union tend to be less expensive than loans offered by a commercial bank. According to the National Credit Union Administration, the average interest rate on a non-secured loan with a 36-month term was lower at credit unions than the average interest rate at banks in June 2017.
More Loan Options
Along with better service and lower average interest rates, credit unions tend to offer customers more loan options than commercial banks. For example, depending on your credit history and score, you might qualify for an unsecured personal loan from your credit union. If you are working to rebuild your credit, a secured loan might be a more appropriate option for you. To get a secured loan, you need to make a deposit that acts as collateral on the loan. Although you are able to find secured loans at credit unions, many banks do not offer them.
The one catch when it comes to getting a personal loan from a credit union is that you need to be a member of the credit union before you apply for a loan. Joining a credit union is usually a simple process, as long as you meet the membership requirements.