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If you need a loan, you have a few options when it comes to where to obtain one, and that includes applying with a credit union. A loan from a credit union comes with a few perks, including lower rates and fees, which can translate into major savings. Plus, you might have better luck getting approved for a credit union loan with bad credit compared to a bank.
Credit unions offer many of the same loan types that you would get with banks and alternative online lenders, such as the following:
Follow these steps to apply for a loan with a credit union:
Credit unions require you to be a member to access their loan products. If you’re not already a member of a credit union, you’ll first need to become one. Requirements can be stringent and very specific. For instance, you’ll need to live in a specific area, work in a certain industry, or meet other criteria.
Before applying for membership with a credit union, review the loan requirements needed to make sure you’re eligible.
Once you’ve been approved for membership, you can apply for a loan. To apply for a loan, complete a formal loan application with your credit union. Along with the application, you’ll also need to supply the lender with the following:
Your credit union will also conduct a credit check to verify your creditworthiness. Doing so is considered a “hard credit inquiry” and may negatively affect your credit scores.
As long as the credit union has everything needed and all your financials and credit health are up to par, you should have little trouble getting approved for a loan. Your credit union will notify you of their decision shortly after receiving your application and all relative documents, which shouldn’t take any more than a day or two.
The funds will then be deposited into your account shortly after.
If you’re concerned about not getting approved for a loan with your credit union, there are a few things you can do to boost your odds:
Unsecured loans can be a bit more difficult to get approved for and often come with higher interest rates due to the higher risk for the lender. If you can offer some sort of collateral to back the loan, such as a car or home equity, you can increase your chances of getting approved for a loan. Just remember that you risk losing your valuable asset if you fall behind on loan payments.
If your credit or income isn’t strong enough to meet your credit union’s criteria for loan approval, find someone you trust with good credit and strong income to add to your loan as a co-signer. Their healthy finances and good credit will minimize the lender’s risk, and therefore increase the likelihood of loan approval. Just make sure that the co-signer understands that they will have to take over the loan payments if you stop making them yourself.
Before you apply for a loan with a credit union, membership will be required, as previously noted. In order to become a member, you will need to meet some criteria, including the following:
The application process should not take too long to complete. Once the credit union reviews your membership application, you’ll be contacted with instructions on how to proceed further.
There are obvious perks to getting a loan from a credit union, including getting access to much-needed funds. But there are other advantages to these loans, as well as some drawbacks that should be considered.
Credit unions are a lot like banks: they allow consumers to open up savings and chequing accounts, provide products like credit and debit cards, and even offer loans like mortgages and loans. They have typical brick-and-mortar branches and ATM machines like banks, too.
But there are certain differences between banks and credit unions. For starters, credit unions -unlike banks – are owned by their depositors instead of shareholders. People who bank with credit unions are considered members, and credit unions are more focused on serving these members as opposed to their bottom line. Further, credit unions are not-for-profit entities, unlike banks that seek to beef up their revenues as their main priority.
Credit unions may have certain criteria when it comes to who can become a member. Some credit unions may accept anyone who lives within a certain distance from the credit union, while others may limit their membership to those who belong to certain companies or labour unions, for instance.
Loans offered by credit unions and banks are relatively similar. Both financial institutions have roughly the same requirements for borrowers to meet, including a strong income, steady employment, and good credit.
That said, credit unions’ lending criteria for members may be more lax compared to banks. In addition, credit unions may charge lower interest rates to their members compared to what banks offer.
Credit unions and online lenders may be somewhat similar in their loan offerings in terms of their more flexible loan criteria compared to banks. But that’s typically where their similarities end.
While credit unions may have less stringent lending requirements than banks, online lenders‘ requirements are even more lax. Different online lenders work with different classes of borrowers, including those with bad credit who would otherwise be unable to get approved for a loan through conventional avenues.
In addition, loan approval is usually much faster with an online lender. While credit unions may take days to provide notification of loan approval, online lenders often approve applications within 24 hours, and even on the same day, the application is submitted. Funding is also much faster with online lenders, who typically deposit the funds within hours following loan approval.
Further, there’s no need to be a member in order to apply for a loan with an online lender, unlike with credit unions. However, online lenders tend to charge much higher interest rates than credit unions.
There are a handful of advantages to seeking out a loan from a credit union, including potential savings in lower rates and fees, as well as a better chance of loan approval with bad credit. Just make sure you consider all your options before choosing to work with a credit union, it’s always important to find the best fit based on your financial needs.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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