Credit union loans are offered by a member-owned organization rather than a private company. As a member of a credit union, you use the credit union for your banking needs and pay a fee. These fees are not designed to result in a profit for the organization; all credit unions are non profit organizations. Instead, the fees are deposited into a fund that can be used to distribute loans to qualified members of the union.

Role of Credit Unions

In recent years, a number of individuals have decided they do not like the conventional, private banking system. Private banks make huge annual profits by providing basic checking and credit services to their customers. Groups of people who do not like banks have pulled together to create their own system. This system of credit unions services the same needs as conventional banks. The members and customers of the union design how the union will operate, set lending and banking standards and enjoy the benefits of a piece of ownership in the institution itself.

Joining a Credit Union

If you would like to consider credit union membership, start by researching credit union laws and existing unions in your state. The Federal Credit Union Act permits individuals to establish credit unions, even in states where there is no legislation. Not all credit unions are created equal, many are innately flawed. Always do your research into the solvency of a credit union, the insurance it offers for your deposits, and the general satisfaction of individual members of the union prior to  investing in them.

Types of Credit Union Loans

You can receive a credit union loan for a home, automobile, business or personal need. The credit union itself determines which types of loans will be offered and the requirements for these loan programs. If you would like to obtain a loan with a federal subsidy or guarantee, such as VA loan or FHA loan, you may not be able to use the credit union for this purpose. Speak with the credit union about its affiliation with these programs before deciding to become a member of the union. 

Applying for Credit Union Loan

The union must make good lending decisions to keep investor and depositor funds safe. You will be asked to fill out an application determining your income, credit score and qualifications for the loan. If you are seeking a business loan, you will be required to submit a business plan as well. The board of directors of the credit union will review and underwrite your loan to review your application. You may include supplemental information regarding your financial abilities if desired. If you are rejected for the loan, you do not have to leave the credit union. Instead, you may reapply for the loan again in the future. 

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