Are you looking to take out a personal loan? Whether you are seeking a personal credit loan, a credit builder loan, or a way to consolidate loans and debt that you already have, you can go to either a bank or a credit union for virtually any type of personal loans. In this post, we will cover some of the basics of credit union personal loans, including the differences between a credit union and a bank as a personal loan lender, how to get a loan from a credit union, and more.
What to Know About Credit Unions and Credit Union Loans
There can be many reasons to pursue a personal loan from a credit union. Perhaps you are already a member of a credit union and want to keep as much of your financial activity in one place as possible. Maybe you have had trouble getting approved for a loan through a traditional bank. In any case, know that credit unions do offer personal loans—usually the same types of loans that would be available from a bank.
Credit unions are not-for-profit financial institutions, whereas banks are corporations that are driven by a pursuit for profits. Credit union members share in the ownership of the credit union, which means that the credit union exists to help members with their financial needs. Where banks are pushing to maximize profits for their stockholders, nonprofits are all about offering the best financial services to their members. Any profits in a credit union context are passed on to the members, which usually means lower interest rates on loans, fewer fees, and all-around more favorable loan terms. These benefits apply to credit union savings accounts, too, which typically accumulate interest at a higher rate than savings accounts with traditional banking institutions.
Another big factor in the “banks vs credit unions” conversation is credit. If you can’t get approved for a loan at a bank due to less-than-perfect credit, that doesn’t mean you won’t qualify for a loan anywhere. Credit unions typically have more relaxed standards and are more forgiving to loan applicants whose credit isn’t great. Again, credit unions exist primarily to meet the financial needs of their members, which means a member with a mediocre credit score will often be able to get approved for a credit union personal loan even if they would struggle to get a loan at most other places.
Many people join credit unions not just because of the lowest interest rates and other favorable features, but also because they like the idea of helping individuals who can’t get approved for loans elsewhere. Where most banks are major national or multinational corporations with branch locations all over the place, credit unions are typically concentrated in one or several communities. What this setup means is that every loan from a credit union is technically funded by the savings of another credit union member. Most credit union members like the idea of being able to give back to their communities in this way, versus a traditional bank where your savings are used to grow corporate profits and benefit the interests of stockholders. There are plenty of more differences when it comes to banks vs credit unions, but that’s a separate topic for another day.
Secured Loans vs Unsecured Loans
Whether you apply for credit union loans or decide to borrow from a traditional bank, one of the big points of information you need to know in any lending context is the difference between secured loans and unsecured loans.
Basically, a secured loan is a loan that is backed by some form of collateral—be it a house, a car, a boat, or some other valuable asset. When you enter into a secured loan, you are putting an asset up as collateral for that loan. If, at some point, you find yourself unable to cover the payments on the loan, the lender has legal right to seize possession of the collateral you used to secure the loan, as a form of repayment. Unsecured loans do not require you to put up any form of collateral.
The most significant benefit of secured loans is that, in most instances, they are easier to get. When the borrower (you) is putting up something as collateral to secure the loan, that means the lender is taking on less risk if they approve the loan. Someone who has poor credit history (or limited credit history) can often improve their odds at securing a loan if they have something they can offer as collateral for a secured loan. Secured loans will also usually have lower interest rates and higher borrowing limits—again, because the lender is taking on less risk by taking on the loan.
Unsecured loans, meanwhile, might be more limited in terms of how much money a credit union or bank is willing to lend you. They will have higher interest rates, which means you will likely spend more money paying off the loan. So, even if you can qualify for an unsecured loan, it is usually a more financially sound decision to go the secured route with your loan.
If you aren’t sure which option is best for you, consider sitting down with a banker or financial investor to learn more about the pros and cons of secured and unsecured loans. At Resource One Credit Union, one of our experts would be happy to chat with you, discuss your options, and advise you on what you might be able to qualify for or what might be best for you.
How to Get a Loan from a Credit Union
In addition to offering financial advice, Resource One is also proud to be a credit union that offers personal loan options. From secured savings loans to line of credit loans, we frequently help our members cover urgent or emergency expenses, consolidate debt, cover substantial purchases, and more. Learn more about the personal loans we offer on our personal borrowing page.
If you are ready to apply for credit union loans in the personal lending space, here are a few steps to get you there.
Become a member of Resource One Credit Union: The financial services at credit unions—personal loans included—are only available to individuals who are members of those financial institutions. If you wish to apply for a Resource One Credit Union personal loan, you will first need to join our credit union. You can apply for a membership online right now! You can also stop by one of our branches if you would prefer to apply in person.
Review the types of personal loans we offer: Before you fill out your loan application, it can be beneficial to know about the specific types of personal loans we offer. On our online loan application, you will find a field that asks for the “Type of Loan” you want. While “Personal Loan” is a good selection even if you aren’t sure what type of loan is best for you, there are more specific options available as well, such as “Credit Builder” or “Line of Credit.” If you aren’t sure which type of loan is ideal for your situation, a visit with one of our bankers might be recommended.
Apply for our credit union loans online: Once you have applied and become a member of Resource One Credit Union—or if you have already been a member for some time—know that you can apply for any of our credit union loans online. Fill out the “Loan Request” form online, which includes questions about your membership status, the type of loan you are seeking, the amount of money you need, and the purpose of the loan.
Once we have received your application, we will review it and get back to you if we require more information or have any follow-up questions. True to the reputation of credit unions everywhere, we do typically offer higher approval ratings for loans—including personal lending—than traditional banks. However, your current financial situation—including your credit rating, your income level, and whether you can offer up collateral for a secured loan—may impact the rates and terms we can offer for your personal loan. In addition to providing details about the types of personal loans Resource One offers, our personal lending page also includes details about the current rates we can offer on personal and credit loans. Scroll to the bottom of the page to find loan rate information.
Apply for a Personal Loan from Resource One Credit Union Today
Perhaps you want to consolidate your bills and debt to make paying them each month more manageable. Maybe you need to finance the purchase of a new appliance or piece of furniture, or to cover an unexpected and expensive medical bill. Perhaps you are just planning a vacation with the family and need a little extra cash to cover the expenses of the trip. Just as buying a house or purchasing a car is worthy of a loan, expenses in your day-to-day life might require a little help. While getting these loans approved at a bank isn’t always easy, Resource One Credit Union is here to help. Apply for our credit union loans online today, or contact us directly to ask any questions you might have.