Credit unions exist in nearly every city, yet many people may not know the fundamental ways in which they differ from banks. Perhaps the most important of these differences is the fact that all banks are for-profit institutions, while all credit unions are non-profits. If you're currently thinking about taking out a loan for a large purchase such as a car or house, and are wondering what advantages credit union loans offer, keep reading to discover some of the biggest ones.
Lower Rates
When it comes to taking out a loan, it is difficult to overstate just how important an interest rate can be to your long-term financial health. To take a hypothetical example, assume you plan to take out a thirty-year mortgage for $400,000 with a typical down payment of $80,000. If a bank offers a 6% interest rate, you can expect to pay in excess of $370,000 in interest over the course of the mortgage — more than the loan itself! Moreover, if your local credit union offers an interest rate of 5%, it may not seem like a substantial difference; yet such a rate of just one percent less would mean reducing interest payments by more than $70,000. These significant savings are just one of the reasons why it quite literally pays to consider credit union loans.
Better Opportunities for Saving
With the cash you save each month because of lower interest rates on your loan, you may want to consider making a regular deposit into your credit union's savings account. This is because credit unions also offer higher interest rates on savings accounts when compared to large banks. In addition, you are likely to be pleasantly surprised when it comes to a lack of monthly maintenance fees and similar charges, which credit unions usually avoid entirely.
Sense of Community
Loans can seem like nothing more than piles of paperwork, but they represent an important long-term relationship between you and a financial institution. As such, having a more personal connection to your lender can be beneficial, and should not be overlooked when comparing banks and credit unions. In fact, a credit union is far superior to banks in this regard, since it operates as a cooperative in which all members have a vote and therefore a stake in its success. Rather than being a faceless corporation, a credit union is a visible and vital part of the community.
Talk to a local credit union to learn more about the loans they offer.
Share6 October 2022
Dealing with money is a fact of life, and although it's something most of us deal with every single day, it can be complicated and confusing. In particular, it can be hard to figure out how much to save, when to invest, when to borrow, and how to maximize your earnings. My goal with these posts is to demystify common confusions about money and finance. If you want to take charge of your financial situation, I invite you to explore this blog. I am going to write about everything from spending to saving, and we're going to explore why both of these elements are important. Enjoy!
