Reducing your interest burden through Credit unions and home equity loans
When you borrow money, you usually look for personal loans and you pay them within a year. Atmost you plan to pay it off in 5 years. However, you need to think about other options as well. For example, individual credit unions offer special loan rates that are beneficial to the borrower. That is why many people consider signing up for credit union loans.
These are some of the features you must know. The insurance of the loan isn’t a direct cost to the eligible borrower but you do receive insurance fo the same. There is an offer of a repayment protection insurance. These loans are usually crystal clear. they do not have any hidden fees or transaction charges whatsoever. Repayments of these loans are calculated depending on the reducing balance of the total loan. They follow the diminishing value method. The interest rates are decided upon the frequency of your repayment and the tenure.
Apart from the above, these loans also offer a variety of repayment options, depending on the livelihood of the borrower. This is indeed an option that other lender do not provide and the main reason that these loans are very popular. Repayment is very flexible for the borrower. He can repay the loan before the due or he can make large repayments than what had been agreed on without any penalty whatsoever. There is no penalty for premature repayments.
In other words, credit Unions are like banks but the former has some unique characteristics. It is often mistaken as banks when in fact, an educated customer would take advantage of the best deal that is offered at Credit Unions and not at banks. People who know about this option definitely prefer credit unions to banks.
There are some differences between credit unions and banks. First, credit unions are owned by the customers. This is different to banks where possible clients are the customers. Banks prioritize profit and the shareholders usually own the bank.
On the other hand, credit unions are usually non-profit organizatons. Their aim to provide service over profitability. Their operations are based on this intention alone.The upper management is composed of board directors deciding on the operations of the credit union. These are elected volunteers. They don’t draw a salary for this but do it voluntarily.
One noticeable aspect is thaat the offer of credit unions is limited to their members. this is important to maintain their credibility. If it isn’t able to limit membership, then they lose their status as a credit union.
Small credit unions can challenge banks when it comes to the income they generate. Credit unions have the tendency to focus on service over profit, that’s why the rate is always better at the credit union. People who know this get their memberships to these credit unions so they can get the aid in times of urgency. Money with the credit union is safe as they maintain it in bank deposits. So they do rely on the banks in one way or other.
So that is as far as getting hidden money from credit unions is concerned. Let us now look at another option.
Take a good look at home equity loans. Home equity loans allow to use your equity as the collateral. The equity is the funds you have that you could use to the property in order to invest it.
Since it is a debt on your property that is in your possession , you have a fair amount of hidde money in there. Teh house itself secures your debt loan. So you have the money as well as teh asset at your disposal at the same time. Whenever the creditor wants his money back, then it can be sold.
Be careful to understand that a home equity loan can either have a fixed rate mortgage or an adjustable rate mortgage. These loans also provide an option for refinancing after a period of time. They are handy financin instruments when taken for a long tenure. You also anjoy tax benefits from these loans at the same time. Banks promote these loans in a big manner as they also get a large interest component as profit. it is a win-win situation for both the borrower and the lender. As a borrower you can benefit significantly from the tax compnent as well.
As far as possible, you should reduce your expenses and save money. Credit unions and home equity loans are ways to reduce the interest rate on the loans and get a larger flexibility on repayment that otehr loans do not normally offer. Now that you are aware of these possibilities of hidden money, you need to evaluate your current needs and plan to reduce your interest costs and start saving more money.
Article by Nakagava Ltd., creator of PiggyBob™, the first truly user friendly personal finance and appointment scheduling software. PiggyBob™ is an extremely convenient tool to help you keep track of your income and expenses, plus a very useful printable calendar to record all important events in your life. Downloand now
