Credit Unions – For People with Bad Credits
All You Need to Know about Credit Unions
Credit Unions – Advantages and Disadvantages
Credit Unions are not-for-profit organisations that are ‘run by the members and for the members’. They are money cooperatives where members can borrow from pooled deposits. The rate of interest on the money borrowed from these unions is quite less when compared to high-street banks. The members of these unions are connected through social similarities or are living in the same area. These are the finest alternative for personal loans, saving accounts and mortgages.
It is the first port of call for people who have bad credit and are planning for a payday loan. It is much better option than a payday loan as the rate of interest offered by credit unions range between 2.5% and 6% per annum. It is based on membership and so, the borrower is less likely to be turned down. The absence of any third party shareholders allow these unions to lend money at much low rates of interest.
If you have a savings account with a credit union then you can take loans with built-in life insurance worth £3,000. You can also convince them for a much bigger amount but, the decision of lending it or not will depend solely on the credit union in question. There are around 500 credit unions in the UK serving nearly 2% of the UK population and thier reach is increasing with every passing day. Profits made by the unions are utilised to give better services and returns are offered on investment to the savers and members.
Credit union advantages and disadvantages:
Benefits:
The major benefit of these unions is that money borrowed from them will not have any hidden charges or early repayment charges.
Their rate of interest are much lower than high-street banks.
They are the best alternative for personal or unsecured loans.
They also include life insurance as a standard and so, your family will not be under a financial crux in the event of your death before repaying the full loan.
The lenders offer personal loans with a repayment time of five years and secured loans for a repayment time of ten years or more.
No credit checks required.
Drawbacks:
Their rate of interest is higher than the cheapest credit cards and credit loans.
Many unions do not allow people who are not their members to get benefitted from them.
The credit unions were formed with a motto of improving financial management of people and requires the borrower to deposit a minimum affordable amount. This amount is deposited every month in the savings account of the member and is usually less than £30 per month.
The best way to find your local credit union is to check www.findyourcreditunion.co.uk or call 0161 832 3694 which is the contact number for the Association of British Credit Unions Limited (Abcul).
For more details about loans, do check www.freepricecompare.com or call us on 02034757476.
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