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A Credit Union Member Has Definite Advantages





Credit Unions are becoming an increasingly popular option for a number of borrowing needs such as mortgages, auto loans, and title loans. In these tough economic times people are turning to credit unions because they are founded in a whole different spirit than banks. They are community owned, non-profit organizations that exist more so to assist people than to enrich their bottom line.

You are not just a number or a potential increase in revenue at a credit union, you are a human being that is part of a community. The other people involved want the same things you want such as affordable, honest transactions and financial associates they can trust.

In the case of mortgages as well as with other types of loans, lower interest rates are a primary reason to choose credit unions. The reason they are able to offer lower rates is because their primary motive isn't profit. The profits a credit union shows are returned to members as reductions in interest rates. As non profit structures they are also exempt from most state and federal taxes.

Whether it is fixed or adjustable rate mortgages that you're talking about, credit unions can almost always undercut banks significantly. And it's not only the interest that is lower, their fees and finance charges are also fewer and lower than at banks. The flip side to this is that you yourself have to be in fairly good credit standing to be part of a credit union, or at least to take advantage of their generally fair and affordable mortgages and other loans.

If you have bad credit, you're probably not going to get a loan from a credit union. The strength of a credit union is in its members, their ability to repay loans in a timely fashion and to deal honestly with their finances. One problem borrower could impact the interest rates of the others, so credit unions are fairly conservative regarding mortgages.

However, since they are coming into wider use, the criteria for membership and loan qualification are getting less strict. The vast majority of Americans are eligible to become part of a credit union in their local area and stand a reasonable chance of getting some kind of loan.

Credit unions are also a good way to go for auto loans. The rates on these loans are generally lower than at banks as with mortgages. About 16 to 18 percent of auto loans yearly in the U.S. come from credit unions. They offer more flexibility with the time frames of loans than banks, and it's in your best interests, pun intended, to get shorter term loans and pay them off quickly.

Vehicles are not as expensive as houses, so your best bet is to think short term, and credit unions allow you to do this economically. Title loans are fairly risky in that if you default on them, your car, which is put up as collateral, can be repossessed. If you're going to take out this kind of loan, why not at least offset the risk with better interest rates and more democratic financial dealings? Credit unions are able to offer title loans that fit your budget and with which there is less chance that you will become entangled and unable to pay.

So if you're thinking of taking out a mortgage or any of these other types of loans, credit unions can be a very good thing to consider. They are a mind set and approach as much as a banking option. Banks really dislike credit unions and spend lots of money lobbying against them, usually on the basis of what they consider the unfair tax breaks they receive.

Their real motivation is clear enough though, since credit unions are reasonable, economical, community run alternatives to banks. They serve as competition that threatens bank profits and the ability to charge more people higher, or even predatory, rates. So you can think of credit unions as, among other things, a way of preserving the checks and balances of money lending in the U.S.


About Author Nick Messe :

Enjoy the convenience of online banking with ICCU - the Illinois Community Credit Union - Our goal is to return profits to our members by offering more service with lower rates on things such as Sycamore IL Mortgages and Dekalb Auto Loans - Call 815-895-4541 for more information - <a href="http://www.ilcomcu.org" target="_blank">http://www.ilcomcu.org</a>


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Article Added on Tuesday, September 21, 2010
LD
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