If you’re considering borrowing money, it’s important to do your homework first. There is a vast range of options, from traditional banks to online lenders, or even payday loan companies. But in the UK at least, there’s one option that often gets overlooked: a credit union loan.
Credit unions are not-for-profit financial cooperatives that are owned by their members. Credit Unions like London Mutual exist to provide affordable financial services to their members, rather than to make a profit. While they may not have the same flashy advertisements as other lenders, getting a loan from a credit union can actually be a smart choice for many people. Here’s why:
Interest rates on credit union loans
One of the main advantages of borrowing from a credit union is that our interest rates are often lower than other types of lenders. This is because, as a not-for-profit organisation, we exist to serve our members, not to make money for shareholders. Because of this, our rates reflect the actual cost of providing the loan, without profit added on top. This means that you could end up paying less in interest over the lifetime of your loan, saving you money.
Personalised service
Credit unions are often smaller and more community-oriented than banks and other large lenders. This means that we can offer a more personalised service, taking the time to understand your individual financial situation and needs. When you apply for a credit union loan, a member of our team will manually consider your application. This is unlike many larger lenders who rely on automated processes or complex scoring systems. When you email, call, or visit a branch, you’ll also be speaking to a member of our UK-based team.
Transparent fees when borrowing
One of the biggest complaints that people have about borrowing from traditional lenders is hidden fees and charges. These can make the loan more expensive than it initially appears. When you get a credit union loan, we don’t have any hidden extras. We don’t charge you extra to have the money paid directly into your account or penalise you if you want to pay off your loan early.
Fully Regulated and Insured
We may be smaller, but you can still have peace of mind that your money is in safe hands. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) regulate all credit unions in the UK. This means that we are subject to many of the same rules and regulations as traditional banks, ensuring that we act in a fair and responsible way towards our members and their deposits.
Credit union support for the community
Finally, by choosing to borrow from a credit union, you’re supporting a local community organisation that exists to serve all its members. We reinvest any profit (surplus) that we make back into our services. This ensures we can continue to work with borrowers who may not meet the strict criteria of traditional banks, and supports a range of financial education initiatives and outreach in the local community. So by borrowing from a credit union, you’re helping to support the local economy and promote financial well-being in our local area.
So there you have it: four reasons why borrowing from a credit union beats other types of lenders. If you’re looking for a loan, it’s definitely worth considering a credit union as your first port of call. Not only could you save money on interest, but you’ll be supporting a local, ethical, and community-focused institution.
