Are you frustrated because banks won’t lend you money? Do you want to avoid the outrageous interest rates of most payday loan companies? The average American household has more than $15,000 in debt – and often no way to pay it off.
If you have not-so-good credit or no credit, it can be difficult to convince a bank to lend you money. You might be trying to buy a car, pay off credit cards, or establish credit. What can you do when banks are turning you away?
We’ll explain why loans from credit unions are a great option for borrowers with bad or no credit. If you’re stuck trying to get a loan from a bank but need money quickly, keep reading!
What Is a Credit Union?
A credit union is basically a non-profit bank. It’s owned by its members, who each have a vote when it’s time to elect the Board of Directors. There are several types of credit unions, but they are all non-profit companies that can loan money at much lower rates than banks.
If you’re looking for a car loan or a low-interest personal loan, check out the credit unions in your local area. There should be credit unions that will accept anyone local for a member.
There are also credit unions specifically for teachers, government workers, military service members and postal service workers. You may also qualify for a credit union that serves students and graduates of a certain university. Look online and see which credit unions you can join.
Do Credit Unions Offer Payday Loans?
Every year, more than 10 million people take out payday loans. These loans are typically under $1000 and are designed to be paid back within a few weeks.
The problem with payday loans is that many payday loan companies are predatory, often charging 400% or more on short-term loans. If you go through an unscrupulous payday loan company, you could end up paying thousands of dollars in fees and interest.
On the other hand, going through a credit union for a payday loan offers you the chance to get a much lower interest rate. Credit union loan requirements are often less stringent than banks’ requirements and you might get your money more quickly.
Credit unions also offer better customer service than banks, catering to a smaller group of customers. If you need a payday loan, don’t go online and get caught up in a cycle of debt. Check out your local credit unions and see what they can do for you.
Can I Get a Car Loan or Personal Loan?
Credit union personal loan rates usually offer a better interest rate than bank loans. Credit unions are also more willing to work with people who have bad credit or no credit.
If you are just starting out and have no credit, you may want to talk to your credit union about a secured loan. Basically, secured loans require you to make a deposit into a safe account. It’s similar to a secured credit card where you make a payment up front.
The benefit of a secured loan is that you know that you can pay it back. You’re demonstrating your ability to receive credit, use credit, and pay it back. Your money might even earn interest while it’s with the credit union.
It may sound strange to build credit in this way, but if you have no credit you might want to buy some. By taking out loans that you can definitely afford and paying them back on time, you will stand out as a trustworthy individual.
Just make sure that you can pay the loan back in time. Only borrow as much as you can afford, even when interest rates are attractive. Talk to your local credit union representative: they can help you figure out how to get started on a car loan or personal loan.
Can I Use a Loan for a Down Payment on a House?
Credit union personal loan rates are attractive. When it’s time to put a down payment on a house, think about a personal loan instead of dipping into your retirement.
Credit unions actually make up more than 10% of the mortgage market. Because credit unions are smaller than banks, they didn’t always have the money available for mortgages or down payment loans.
In the last several years, credit unions have begun to offer loans for down payments and mortgages. They offer lower interest rates and often include incentives: no mortgage premiums and no down payments.
You can take out a loan for a down payment, but if your credit union offers 100% financing then you can just take out the mortgage instead. Credit unions are willing to work with people who have iffy credit. Just explain your financial situation and they can help you figure out the best way to proceed.
Another idea you might like is to get a personal loan in order to consolidate your debt. If you have student loans and credit card debt, you may be paying more in interest than you need to be. Getting a personal loan through a credit union can help you pay off debt.
Get Started Finding Loans from Credit Unions
The first step toward getting any loan is to figure out how much you need – and how much you can afford to repay. Use a loan calculator to see how much your monthly payments would be and make sure that your budget can handle the expense.
The best thing about loans from credit unions — besides the low-interest rates — is the fact that they really care about their customers. They are committed to helping people with bad or no credit work their way up in the financial world.
When you go to a credit union to talk about a loan, bring two pay stubs and your photo ID. They may need confirmation from your employer, so bring your work’s fax number and email contact information.
We excel at helping our clients find personal loans and credit cards that work for them. Send us a message and we can help you get started online.