Credit Union Loans

Credit Unions are non-commercial organisations, owned and run by their members. They are operated for the benefit of members and there are currently about 500 of them throughout the country. Members pool their savings in order to lend this money out to other members who need a loan.

Being not for profit organisations, there are no payments to make to shareholders, and no staff salaries to pay, so any profits can be shared among members. This is usually done in the form of a dividend shared out among savers.

Membership is currently dependant on the people involved having a 'common bond', such as living in a certain area, working for the same employer, being in the same association or union, etc. The government are considering relaxing the criteria, which would make it easier for more people to join credit unions.

Credit unions encourage people to save whatever they can. Traditionally members will need to have established a track record as a reliable saver before being able to borrow money, but more credit unions are relaxing this rule and allowing new members to borrow cash.

Credit Union Loans - Borrowing From A Credit Union

There are many advantages to borrowing from credit unions. Some of the advantages are:

• There are no hidden charges (such as arrangement fees) or early repayment penalties
• Interest rates are very competitive
• You can borrow as little as £50
• There is more flexibility over the time taken to pay the loan back (from three months to five years)
• Your loan normally includes free life insurance so the loan is paid off should you die before paying it back

Most credit unions can lend money for up to five years for unsecured loans, and up to ten years for secured loans (secured loans are tied into some of your assets, such as your home). Credit Union loans are particularly useful when you need just a small amount to cover Christmas, unexpected repair bills, etc.

A credit Union will of course want to know that you have enough money to keep up with the repayments for any loan you take out. Although they are not for profit, that does not mean they will not take action to get their money back if you should default on payments. If it is a secured loan against your house, this means you could potentially lose your home in the same way as you would with a commercial bank.

Joining a Credit Union can be particularly useful if:

• You don't want to have a bank account, or can't get one
• You have a poor credit history
• You can't save money every week or every month

Search For A Credit Union Near You

Follow this link for a List of Credit Unions in the UK.