Credit Union Loans: What to Know

Loans are a natural part of getting your first car, home, and college degree. Many people even take out small loans to pay for weddings and other life expenses, especially when urgent needs arise.

Credit union loans are very similar to loans from banks. However, credit unions may be able to offer you personalized offers and deals that national banks can’t, without charging excessive fees or interest. Due to their member-controlled nonprofit structure, credit unions are member-focused and deliver incredible customer service and other benefits.

Credit unions still offer the same types and sizes of loans as big banks and other financial institutions, but the perks of credit unions make them stellar financial partners for you and your family’s future.

Types of Loans Offered

Large credit unions usually offer home loans, auto loans, student loans, and other personal loans. They may also offer refinancing and debt consolidation for existing loans originally financed under higher interest rates.

Some credit unions offer secured loans designed to help customers build their credit history and boost their credit score. These credit unions allow customers to tie a loan to their savings account or another asset, making it possible to build credit or offset a poor credit score from past debt.

T&I Credit Union offers an assortment of auto loans, student loans, and even home improvement loans. All forms of loans take into account the lessee’s credit score and income, but generally, credit unions make every effort to provide the following types of loans to members.

Personal and Student Loans

Personal loans can cover life expenses ranging from college to weddings. These loans are usually unsecured for qualified buyers, but secured loans are also available. In some cases, the loan officer for the credit union will need to see documentation for the expenses the loan is intended to cover.

Interest rates vary, but personal loans with 12-month terms can be as low as 5.99% APR. Because credit unions are nonprofits, they almost always have better rates than payday lenders and other companies.

Auto, Motorcycle and RV Loans

Credit unions are a great resource for car loans because they usually offer lower interest rates than auto dealerships. Since transportation doesn’t just involve cars, make sure to consider a loan for other vehicles and boats as well. You can get your dream boat or motorcycle faster with a low-interest loan.

Home Loans

Mortgage refinancing is one of the most valuable options a credit union can offer. Refinancing allows homeowners to take advantage of lower interest rates offered by a credit union to get a lower monthly payment. Credit unions also offer home equity lines of credit, which use a homeowner’s share in their home to secure the loan, and other loans to pay for home improvements.

Limits on Loans

Banks and credit unions both have dollar amount limits on some types of loans. The exact amount a customer is eligible can vary, but generally, credit union personal loan limits are somewhat lower than bank loan limits. This is a natural result of most credit unions being smaller organizations than banks and safeguards put into place by the National Credit Union Administration (NCUA).

However, larger credit unions can offer loans that are more than sufficient for most customers. Plus, having access to a larger loan may not matter if the resulting interest rate is higher than the customer can afford. Credit unions’ lower interest rates make their offerings much more appealing to working families and young professionals.

Most personal loans at T&I Credit Union are limited to $10,000 per qualified member. Some loan types, like student loans and home equity lines of credit, have much higher limits.

Eligibility for Loans

Although some credit unions have residency requirements or require members to work for a certain employer, some are open to almost anyone. Eligibility for individual products varies based on your credit score, assets, income, and other factors.

Generally, credit unions are more lenient in their eligibility requirements than national banks. Because they are smaller and nonprofit, credit union officials will often consider extenuating circumstances when considering an application from a customer with less than perfect credit.

Most credit union loans that are unsecured still require a decent credit score. However, secured loans are often available to anyone who is willing to open a savings account in the same amount as the loan.

No matter what your credit score is, credit unions are worth investigating for their short- and long-term loan options. You may be surprised at the terms and conditions you qualify for.

Application Process

Many credit unions allow you to apply for loans online, but they are also happy to meet and talk about your loan in-person. Credit unions will usually be able to provide you an estimate of your loan terms instantly and then give you a formal final offer once you have completed a full application.

Most require you to provide evidence of your income, assets, and the purpose of the loan as part of the full application process. For example, student loan applications usually need to provide information about the university they are attending.

They will also check your credit report formally during the application process. This hard check on your credit score may cause your credit score to temporarily dip by about five points, but this drop is usually not significant enough to affect future loans.

Private student loans take at least two weeks to process and disburse and may take longer if additional information or verification is needed. However, since private student loans are not subject to FAFSA deadlines, they are a convenient option for paying expenses at any time of year.

Information and Customer Service

Most credit unions allow customers to access information about their loans through convenient and secure online systems. These systems store information about the amount due on the loan, length of the loan, and due dates. Account holders can control automatic payments through these portals.

Credit unions work hard to provide financial literacy such as seminars and online articles for their members. These resources provide an easy way for members to make better financial decisions and decide on loans wisely. Since credit unions are nonprofits, they aren’t incentivized to upsell, which makes their information reliable and fair to members.

If you have questions about your loan, it’s important to be able to reach out and get your questions answered as soon as possible. Credit unions keep their customer service hours as long as possible and maintain clear and informative web pages and frequently asked questions.

Your Partner for a Brighter Future

Getting a loan from a credit union is one of many ways to invest in your future. Personal loans, lines of credit, refinancing, and other financial tools go a long way to establishing peace of mind and a lifestyle that works for you.

T&I Credit Union offers a range of financial services, including credit cards, checking and savings accounts, and loans. We have networked with credit unions around the country and built a secure online system to give you the services you need.

Our loan officers will work with you to find the customized loan solution that brings your family closer to your goals. Contact us at 1 (800)-338-3908 to learn more about our services.

About Marsha Smith

Marsha Smith was born and raised in Ohio, where she obtained her Bachelor of Arts in Public Affairs. She is passionate about financial literacy and helping other young people navigate student loans, car payments, and buying a home.

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