Personal Loans: 5 Benefits of Getting a Personal Loan with a Credit Union

By: iTHINK Financial | Jul 02, 2023

Personal loans are a useful tool for those trying to finance a major purchase, cover unexpected expenses, consolidate debt and improve creditworthiness. And securing one of these loans through a credit union can help both your budget and peace of mind. For those looking to increase their financial literacy on personal loans and beyond, our team of iTHINK Financial experts frequently pens industry insights and helpful tips. To learn more about our institution’s personal loans and rates, visit our Personal Loans page.

Before you make the decision to take out a personal loan, you should consider if it’s in the best interest of your financial health. If you aren’t sure, you should discuss this next step with a trusted financial expert, such as a licensed financial advisor. For many individuals who have already decided to take out a personal loan, the next step is figuring out how to secure one. It’s important to consider who you are borrowing from and choose the institution that offers the best loan terms and interest rates.

When you apply for a personal loan, lenders will assess your creditworthiness by checking your credit score. This score will impact the conditions of your loan, including the repayment terms, interest rates, and more. It’s important to note that personal loans sometimes have higher interest rates than other types of loans, such as a home equity line of credit (HELOC).

While many financial institutions offer personal loans, there are significant benefits in looking to a credit union for this type of loan. Credit unions are non-profit, typically offer better interest rates, are more community-focused, provide excellent customer service, and may offer more flexibility in repayment terms. Keep reading to learn more about these benefits and how they can help you as you consider taking out a personal loan.

1. Credit Unions are Non-Profit Organizations

One of the most notable differences between a credit union and a typical bank is that credit unions are non-profit entities. While public companies answer to their shareholders, credit unions are owned by their members, so the profits go back to them in the form of lower interest rates and additional savings.

This distinction also means that while for-profit companies must prioritize profits, credit unions often prioritize serving their members well.

What does this mean for me?

Since credit unions are not designed to generate profits, but rather serve their members, they’re able to offer better lending conditions. This means that when you go to take out a personal loan, you may benefit from lower interest rates and more favorable terms than if you were to go to a bank.

2. Credit Unions are Community Focused

Since credit unions are member-owned, they are more focused on community empowerment than saddling members with high interest rates. They are dedicated to helping members achieve financial success, whether it’s through better interest rates or financial literacy services.

What does this mean for me?

A credit union member's success determines a credit union's success. In other words, credit unions will go the extra mile to make sure that you not only have access to financial services but also that you truly understand the impact of each service on your financial health. When you’re taking out a personal loan, you need to be able to trust that your lender isn’t trying to trick you into accepting poor terms regardless of how it impacts your finances.

3. Credit Unions Can Offer Excellent Customer Service

Credit unions offer friendly, community-focused, and helpful customer service. As credit unions are highly community-focused organizations, they are known for having the best customer service around, with local teams available to help members navigate problems big and small and offer sound advice. 

What does this mean for me?

Customer service is crucial for those looking to secure a loan with favorable rates and terms. When it comes to working with lenders, understanding your options, and even being able to ask important questions, customer service can be vital to your experience.

4. Credit Unions Can Offer Good Rates

As we’ve discussed above, credit unions are under less pressure to generate revenue and are often able to offer better rates than banks. Since they don't need to worry about answering to shareholders, they can better meet the financial needs of members.

What does this mean for me?

With lower interest rates, you will owe less debt for the same principal amount. While a low interest isn’t guaranteed, you’re much more likely to find a rate that works for your budget at one of these financial institutions.

5. Credit Unions Can Be Flexible

When it comes to borrowing money, it’s helpful to have a lender in your corner who offers you flexibility in your repayment plan. Another benefit of being member-owned is that credit unions can offer a higher degree of flexibility with your loan terms and conditions than traditional banks.

What does this mean for me?

This increased flexibility means you can enjoy a more competitive rate on your personal loan as well as loan terms that work for your budget and timeline. If you have a lower credit score, credit unions maybe be able to provide financing that you couldn’t secure at a traditional bank.

The Bottom Line

When it comes to securing a personal loan, you have a lot to think about. We know it can feel overwhelming, but you can rest easy knowing that credit unions are here to help you achieve your financial goals rather than line their pockets. Once you decide that taking out a personal loan is the next right step for your financial goals, we highly recommend looking to a credit union to secure your funding.

We’d love to be a part of your financial growth, and you can apply online today with iTHINK Financial to secure your own personal loan. Learn more about our rates and reach out to one of our financial experts will help you find the best solution for your financial goals.