Borrowing Loans—Why Credit Unions Are Better Than Banks!

Borrowing Loans—Why Credit Unions Are Better Than Banks!

Applying for a loan is a common practice among home and business owners. Whether you need funds to open a new grocery store or to finance a personal expense, a good rule of thumb is to start by conducting thorough research.

If you’re considering getting a loan from either a bank or a credit union, you need to understand the pros and cons that each option presents.

Banks have their benefits, but in our opinion, credit unions are the clear winner because of these five reasons.

Lower Interest Rate on Loan

As a borrower, you’ll be more likely to get lower interest rates from a credit union compared to a bank because credit unions are not-for-profit lenders that invest profits into the benefit of their union members instead of serving the needs of a third party stockholder. Currently, nearly 119 million people in America are credit union members who enjoy the benefit of low interest rates.

Interest rates are calculated based on a number of variables. A few of those are:

  • Credit score—high credit scores mean lower rates
  • Monthly income—the higher the income, the lower the rate
  • Loan type—a low risk loan will have a lower interest charged

Unseen factors like the reputation of your employer and the type of relationship you have with the credit union can also affect interest rates. Credit union interest rates can be one to two percent lower than ones offered by a bank.

The annual percentage rate (APR) on auto loans go as low as 3.04 percent.

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Discounted Loan Rates

From auto loans to personal finance and funeral loans, credit unions can help you save money, especially if you have a checking account. You can get a further discount if you plan on paying the loan back through your regular checking account.

Higher Approval Odds

A bank may reject your application after doing a risk assessment or if you have a low credit score, but most credit unions are willing to work with such borrowers. With credit unions, it’s more about the personal relationship you have with the institute rather than your credit issues.

Better Customer Service

Credit unions are more approachable and likely to work with you on a personal level because they operate on a small level. The customer-friendly model ensures that you are getting full attention from the staff and getting the best services possible.

Check out the more membership benefits for borrowers based in Florida. For further information about getting a loan, get in touch with Tyndall Federal Credit Union.

The institute is based in Panama, Florida and provides a broad range of financial services to make banking easy for you.

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