Looking for a loan? A bank and a credit union will provide generally the same options. You can get a loan from both places, and they’ll have similar terms. However, credit unions do provide a unique service. That’s why a lot of people have switched from banks to credit unions. What exactly is different about a credit union loan, though? Here are the biggest differences that you need to understand.
The biggest difference between a bank and a credit union is that a bank is a for-profit institution while a credit union is a nonprofit service. We’ve talked about this difference on a couple of our other pages, but what does this mean when it comes to loans? Since a bank is a business, it will ultimately make decisions based on how much money it will make. A credit union, on the other hand, makes decisions based on how well it can serve its members. This often means that loans come with more flexibility. For example, credit unions will look at more than your credit score when you apply for a loan, which means you may find it easier to get the funds that you need.
That said, you do need to be a member of a credit union before you can get a loan there. Banks don’t have these requirements. So, what does membership mean? It depends on the credit union. Credit unions extend memberships based on different criteria. For example, your city or state might have a credit union that offers membership to all residents. Some credit unions offer membership based on careers. As we’ve pointed out elsewhere, you shouldn’t let the idea of membership intimidate you. Finding a credit union with the right membership criteria is easier than most people realize.
One of the biggest selling points for credit union loans is the discounted rates. It often costs less to get a loan through a credit union than it does through a bank. Like we mentioned above, credit unions are nonprofit organizations that try to do what’s best for their members. Since they’re not concerned with making a profit, they can offer better rates.
Looking for a credit union loan? Still deciding between credit unions and community banks? We can help. Bundlefi matches business owners with the best banking resources. We take all the hassle out of finding the right financial institution. Need some help? Want to learn more? Then contact Bundlefi today.