There is an increasing number of people that believe in Credit Unions replacing Payday Loans in this war in lending business. Whether this is true or some kind of fiction is exactly the thing I want to discuss in this article. We all know everything that there is to know about payday loans, but our overall knowledge into credit unions is somewhat small, and due to that we will place our focus on credit unions and we will input some comparison with payday loans in it.
Credit union is made out of people who join together in order to provide current and saving accounts and loans to all its members. In many cases there is some kind of connection between members of the same credit union. Credit unions offer loans to its members, somewhat similar to online payday loans sites that connect borrowers and lenders, but in this case it is between trusted members of the union.
There are many advantages of joining these unions rather than taking payday loans. People with low incomes prosper from these union, same people that would have taken payday loan if they had no choice. Interest rate in loans from these credit unions is a lot smaller than payday lenders offer, and other conditions of the loan are also better. For example in credit union they might give you extension on repayment of credit union short term loan, and it will not cost you anything, while on the other hand payday lender might extend your loan if he or they feel like doing, but that will cost you in either increased interest rate or one fixed payment for the extension.
Credit unions have existed for quite a lot of time, but they were not as popular as they are now. Their popularity is still growing and companies and organizations have big influence in that. Credit unions don’t have aggressive advertisement programs, and due to that majority of people are unaware of their existence and their benefits.
In last few decades number of people that god indebted to payday lenders is high. Some of those people get very high debts which makes them quit job and search for higher sources of income in order to repay those debts. This is inconvenient for both workers and their companies. The companies don’t want unhappy workers who fail to do their job due to stress caused by unpaid payday loans. Since the number and size of credit unions increased those companies arguing their workers to become a part of one such union.
This is done to benefits of both parties. Workers will have a source of loans which will not strangle them with high interest rates and unfair conditions of loan repayment and companies will have workers that are free from payday loans clutches and they will be able to focus on their work.
So, I would say that credit unions are a lot better than payday loans, but the number of credit unions is fairly low, and right now not everyone can become a member of one.