Credit unions offer affordable alternative for loan seekers

Many of the consumers that are seeking loans from banks and larger lenders may have been disappointed recently, as the credit crunch as resulted in many lenders hiking up the cost of borrowing considerably, and many others tightening their lending criteria and making it far more difficult for the average person to get the finance that they need.

All sectors of the finance industry have been affected. However, some industry officials have said that credit unions could prove to be an excellent alternative for those struggling to secure finance.

Lucia Webster, Head of Membership Services at the Association of British Credit Unions (ABCUL) said: “Credit unions offer a great alternative to money shops and payday loans for people needing small loans over relatively short periods. Credit unions charge no more than two per cent on the reducing balance of a loan and many charge just one per cent, which would mean that £1,000 taken out for a month and paid back weekly would accrue just £5.76 in interest at one per cent.”

She added: “I would recommend that anyone needing a small loan first looks to their own bank or building society or credit union for a loan, rather than using doorstep lenders or money shops, if they want a good deal. Credit unions are not as well known in Great Britain as they should be but they are basically financial co-operatives which aim to get the best deal for their members. In the US and Ireland, for example, credit unions are very much mainstream financial institutions with millions of members.”

Credit unions are growing in popularity as well as in the range of services available, and offer loans, savings facilities, advice, and a variety of other financial products.