Credit Unions function focussing on 3 key areas:
1. To provide loans at low rates that are affordable
2. Encourage all members to save an affordable amount regularly
3. Helping members in need of financial advice and assistance and making sure they get trustworthy and reliable advice
Credit unions act in the interests of all members and aim ensure they don’t let their members take out loans they cannot pay back by assessing their income and, in some cases, how much they’ve been able to save.
Credit Unions also cap the amount of interest they charge on their loans to 3% a month (or 42.6% APR, annually in Wales, Scotland and England). The cap in Northern Ireland is 1% a month.
How A Credit Union Works?
A Credit Union works by pooling together member’s money in union holdings and then this money can be lent out to other members who need it through a low interest loan agreement.
Credit Union Loans
First thing to be aware of is you typically will need to be a member of a Credit Union prior to getting a loan from one. Some Unions will also require you to build up some savings first, amounts are subjective and depend on the Union you are a member of.
Most credit unions will charge you an average of 1% interest a month as you pay off the loan.
In some cases the charge will be less, in others the charge can be more, although legally they cannot charge more than 3% a month (or 42.6% APR).Tags: Credit Union Loans, Credit Union UK, Fast Loans