Credit Union Or Bank Loan - What Is The Difference

By Author: Danny Aaron
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Taking out a loan is quite simple and people hardly have problems with this situation. However if you had to choose between taking out a loan from a bank or credit union you would have a lot of questions regarding the differences. This article discusses these differences so you can make the best decision regarding your loan.

A credit union is an institution where you as an account holder owns part of that union this is completely different to a bank. Credit unions also offer lower interest rates, which are decided by a Board of Directors which, you as a member will elect. They exist to promote community development or sustainable international development at a local level. Another difference is that you need to become a member to be able to anything like depositing money, transfers etc. There are parallels to banks this is in terms of the terminology that they use, for example: share draft (checking account), share accounts (savings account) and credit cards are also similar.

Banks are simple and most people know what a bank is about. When you need a bank loan you should think all the options. The bank will normally, ...
... in contrast to credit unions, offer you a higher bank loan. In other words credit unions offer a lower interest rate but a lower sum of money to have access to in terms of loans. Also when applying for a bank loan, you can be assured that banks will serve your financial needs with very little questions asked, but credit unions usually offer a membership to a specific class of customer, whether it is defined by profession or geographic area. Banks, however, do offer a wider range of services, and are often more accessible to customers. In the case of traveling, you will find it easier to find your branch in all parts of the country.

In terms of profits there is a vast difference between banks and credit unions. In banks the profits are shared between the investors of the specific bank. Credit unions are non-profit entities and therefore the profits go to you as an account holder/member in the form of lower interest rates and higher dividends.

Credit unions do offer a more personal feel to doing business with them. Banks are more impersonal because they have to deal with so many different people. This is a matter of personal preference; you need to decide what's better suited to your needs. Credit unions and banks are all different, meaning a bank can differ from another in terms of their interest rates and the same goes for credit unions. Therefore you need to go do some homework and don't worry it'll take you less time than watching a commercial break. You need to go on different bank and credit union sites and compare rates, which are really easy processes.

When choosing between a bank and a credit union for a loan, that choice should reflect your own personal self interest, and should be decided after examining your particular financial situation. The bottom line is that you should take an interest in your interest.
Danny Aaron manages the website http://www.creditcardsandloans.co.za, a website devoted to offering the best bank loan information for consumers in South Africa.