Credit Union Personal Loan Requirements
If you’re looking for a personal loan in Utah, you may be wondering whether a credit union is a viable option. You may also have some questions, such as:
- Am I eligible for a personal loan from a credit union?
- Will I qualify for a personal loan from a credit union?
- Are there any benefits to getting a loan from a credit union?
- What is involved with getting a personal loan from a credit union?
Here, we’ll take a closer look at everything you need about credit union personal loans and loan requirements in Utah, along with how getting a personal loan from a credit union can play a valuable role in helping you achieve your financial goals.
What Is a Personal Loan?
A personal loan is exactly what it sounds like: money borrowed for personal use. Borrowers use personal loans for many things, including home improvement projects, debt consolidations, and medical bills. Some people also use them to refinance existing loans or for other large purchases, such as vacations and weddings.
Common lenders of personal loans include banks, credit unions, and online lenders. After taking out your personal loan, you’ll be expected to pay it back in installments—fixed monthly payments—over a set period. Most personal loans are paid off within two to seven years.
The majority of personal loans are unsecured. This means they aren’t backed by collateral. As such, lenders carefully consider whether you’re a good candidate for a personal loan by looking at several factors, including:
- Credit history
- Credit score
- Debt-to-income ratio
- Free cash flow
Some lenders may offer you a secured or co-signed loan. These are either asset-backed loans or loans that are co-signed by an applicant with strong credit who will be responsible for the loan if you default.
Worried that a personal loan will hurt your credit? While applying for the loan may ding your score, the impact is negligible. Plus, as long as you pay your loan on time, a personal loan has the potential to help you build credit and boost your score. Your score will only be damaged in the long run if you make a late payment.
The Benefits of a Credit Union Personal Loan
If you need cash to pay for a non-discretionary expense, and you don’t have enough in your savings or emergency fund, a personal loan can be an excellent option.
However, all personal loans aren’t created equal. It’s important to practice due diligence when evaluating the personal loan that’s best for you, including comparing the annual percentage rate (APR) offered by each lender. Rates usually start around 6 percent APR and can go as high as 36 percent APR depending on the lender and your credit.
Credit unions can offer unique benefits when it comes to both rates and benefits. As not-for-profit financial institutions, credit unions often offer better rates and fewer fees. If you have bad or no credit, you may also have better luck getting approved for a personal loan at a credit union.
Think of it this way: As for-profit institutions, banks are in the primary business of making money. As non-profit institutions, member-owned credit unions pass their profits along to their members—often in the form of everything from lower fees on loans to higher interest on savings accounts.
Finally, local credit unions often come with a level of personal service that you simply won’t get at a big national or international bank. When you walk into a credit union, they want to work with you.
How Do I Get a Personal Loan from a Utah Credit Union?
If you’re ready to move forward with a personal loan, here are the steps you should take:
- Check your credit score. A good credit score not only increases your chances of qualifying for a loan but will also help you get the best rates. (And remember: credit unions can be more forgiving than banks when it comes to loan eligibility.)
- Compare rates. With your credit score in hand, you’ll have a much better idea of the rates you can expect. An online loan payment calculator can help you know what to expect in terms of estimated interest rates, monthly payments, total principal, and interest.
- Get pre-qualified. Pre-qualification lets you get a firmer idea of your offers, and in most cases, it won’t even affect your credit score. You’ll need to provide basic personal information during the pre-qualification process, including your name, date of birth, income, and intended purpose for the loan.
- Shop around and compare. Make sure to consider several options, including credit unions.
- Know what you’re signing. Once you’ve decided on a loan, make sure to read the fine print to confirm that you understand the terms. Things to look for include fees, automatic withdrawals, and APR surprises, such as origination fees that might not have previously been disclosed.
- Look for the benefits. There may be additional features that sweeten the deal, such as lenders that report payments to the major credit bureaus and letting borrowers adjust their payment date.
- Apply and get approved. Once you’ve picked a lender, it’s time to formally apply for the loan. While application requirements vary depending on the lender, you’ll need identification, address verification, and proof of income. (At this point, the lender will run a hard credit check.) If you’re approved, you may receive the funds in as little as a week.
Apply for Your Personal Loan in Utah
If you live in Utah and are wondering whether a personal loan from your local credit union is right for you, here’s one rule of thumb: If a personal loan will help you reach your financial goals (as opposed to adding to your debt), then it’s a good financial move.
Conversely, if you plan on using a personal loan for something that won’t ultimately save you money, boost your income-generating potential, or increase the value of something you already own, it may be ill-advised from a financial wellness perspective.
At UCCU, the benefits of membership don’t stop when it comes to personal loans. The same pros apply across all financial products, including credit cards. If you’re thinking of opening a new credit card, go here to learn how to choose the best credit card.How to Choose the Best Credit Card