Taking out a loan is quite simple and people hardly have problems with this situation. However if you had to decide between taking out a loan from a bank or credit union you would have a lot of questions regarding the differences. This article discusses these differences so you can make the best decision regarding your loan.
A credit union is an institution where you as an account holder owns part of that union this is completely different to a bank. Credit unions also offer lower interest rates, which are decided by a Board of Directors which, you as a member will elect. They exist to further community development or sustainable international development at a local level. Another difference is that you need to become a member to be able to anything like depositing money, transfers etc. There are similarities to banks this is in terms of the terminology that they use, for example: share draft (checking account), share accounts (savings account) and credit cards are also similar.
It is simple to understand a bank and most people know the different functions and processes of banks. You still need to know what you should expect in terms of a bank loan. The bank will probably offer you a higher loan to have access to whereas a credit union offers you a lower interest rate but for a lower sum of money. When applying for a bank loan, you can be assured that banks will serve your financial needs with very little questions asked, but credit unions usually offer a membership to a specific class of customer, whether it is defined by profession or geographic area. Banks also offer a wider range of services and are open to a lot of people and banks are more accessible when you travel to different countries.
In terms of profits there is a vast difference between banks and credit unions. In banks the profits are shared between the investors of the specific bank. Credit unions are non-profit entities and therefore the profits go to you as an account holder/member in the form of lower interest rates and higher dividends.
Credit unions do offer a more personal feel to doing business with them. Banks are more impersonal because they have to deal with so many different people. This is a matter of personal preference; you need to decide what’s better suited to your needs. Credit unions and banks are all different, meaning a bank can differ from another in terms of their interest rates and the same goes for credit unions. Therefore you need to go do some homework and don’t worry it’ll take you less time than watching a commercial break. You need to go on different bank and credit union sites and compare rates, which are really easy processes.
Take interest in your interest, that’s the bottom line. You need to understand and ask as many questions as you want in order for you to get the best suited loan. You need to look at what you can afford and what would suit your personality and your pockets.
