All You Need to Know About Personal Loans

Personal loans, sometimes called unsecured loans, are loans that allow flexible use, offer short- to moderate-term repayment options and quick funding. Their versatility and convenience make them a popular choice for borrowers of every financial standing. Let’s take a deeper look at personal loans, how they work, and their pros and cons.

How personal loans work

If you’re interested in taking out a personal loan, visit your credit union in person or online, complete an application, and pending approval, you can walk away with the lump sum you requested, typically within one to three business days. You’ll need to repay the principal of the loan, along with interest, over the loan’s term, which can be as short as six months or as long as seven years, depending upon your lender.

Unlike most other loans, like home loans and auto loans, personal loans are not intended to be used for a single, specific purpose. Once the money is in your hands, you are free to use the loan in any way you please. Some popular uses for personal loans include:

Purchasing a recreational vehicle, like a boat or ATV
Funding an adoption
Covering medical bills
Paying off credit card debt
Covering a large purchase of any kind
Paying for a dream vacation
Funding a wedding

Personal loans are an easy and convenient way to get a lump sum of cash quickly for almost any possible use.

Pros of personal loans

There are several distinct advantages to borrowing money through a personal loan.

First, as mentioned, personal loans provide the borrower with the unique freedom to spend the funds in any way they choose. The lender won’t ask to see evidence of how the money was spent, nor will they care to know. The borrower has full discretion over the money.

Second, most personal loans are unsecured. This means there is no collateral, or valuable asset backing up the loan. Consequently, unlike other loans which put the borrower’s assets at risk of being repossessed if they default on the loan, there is no risk to the borrower’s property or possessions through a personal loan.

Finally, applying for a personal loan tends to be a lot faster than applying for most other loans. You’ll need to have a decent credit score and provide proof of income, but if your finances are in order, approval can happen in 24 hours or less.

Cons of personal loans

There are some disadvantages to personal loans that borrowers should be aware of before going ahead with an application.

First, as unsecured debt, personal loans that are not backed by any collateral will likely have a higher interest rate than loans borrowed against an asset, like a home or a car. The most recent data on the national average interest rate on unsecured loans is 9.28%APR* for credit unions and 10.21% for banks. In contrast, the average interest rate on 60-month new car loans is just 3.45% for credit unions and 5.10% for banks. It’s a good idea to run the numbers to be sure you can comfortably meet the monthly payments before finalizing a personal loan.

Also, even if a personal loan is unsecured, a lender may be able to place a lien on the borrower’s assets if the borrower is delinquent in their payments. While this only occurs in extreme cases, and the lender must sue the borrower in court before they can obtain a lien, it’s important to be aware of this possibility. If it indeed occurs, the borrower could be stuck paying attorney fees and court costs in addition to the loan amount and late fees.

Finally, the amount of money you can borrow through a personal loan may be significantly less than the sum you can borrow through other loans. The exact amount you can borrow will depend on your creditworthiness, but as a general rule, when debt is not secured, lenders are more tight-fisted. Find out how much you’ll be qualified to borrow before you decide to apply for a personal loan.

If you’re ready to take out a personal loan, call, click, or stop by today! With rates starting at just 9.95% APR**, our loans offer qualifying members a convenient and affordable way to borrow a large sum of cash quickly.

* APR = Annual Percentage Rate.

** All loans are subject to credit approval, as well as income verification and employment verification. Rates are subject to change without notice. Personal Loan Payment Example: For a $5,000 with a 36-month term payments at 9.95% APR, the monthly payment would be $32.24 per $1,000.

Truth In Savings Disclosure

TRUTH IN SAVINGS DISCLOSURE

Except as specifically described, the following disclosures apply to all the accounts.

Rate Information. The dividend rate, or interest rate, and annual percentage yield on your accounts are set forth on the reverse side. The annual percentage yield is a percentage rate that reflects the total amount of dividends/interest to be paid on an account based on the dividend/interest rate and frequency of compounding for an annual period. For Certificates of Deposit and IRA Certificates of Deposit, the interest rate and annual percentage yield are fixed and will be in effect for the term of the account. The annual percentage yield is based on an assumption that interest will remain on deposit until maturity. A withdrawal will reduce earnings.
Nature of Dividends. Dividends are paid from current income and available earnings after providing for the required reserves. The dividend rates and annual percentage yields are the prospective rates and yields that the Credit Union anticipates paying for the applicable dividend period.
Compounding and Crediting. Interest and dividends will be compounded and credited as set forth on the reverse side. The dividend/interest period for each account is also set forth on our Rate and Fee Schedule. The dividend/interest period begins on the first calendar day of the period and ends on the last calendar day of the period.
Balance Information. The minimum balance required to open each account is set forth. Interest is calculated by the daily balance method which applies a daily periodic rate to the principal in the account each day.
Accrual of Dividends. Dividends will begin to accrue on cash deposits on the business day you make the deposit to your account. Dividends will begin to accrue on noncash deposits (checks) on the business day you make the deposit to your account. If you close your account before accrued dividends are credited, accrued dividends will not be paid.
Account Limitations. The account limitations for each account are set forth in our Membership and Account Agreement
Your account will mature on the maturity date set forth on your account receipt or renewal notice.
Early Withdrawal Penalties. A penalty may be imposed if you withdraw any of the certificate funds before the maturity date or the renewal date, if this is a renewal account.
Amount of Penalty. For Certificates of Deposit and IRA Certificates of Deposit the amount of the early withdrawal penalty for your account is 90 days’ interest for a term of 12 months or less, and 180 days’ interest for a term over 12 months.
How the Penalty Works. The penalty is calculated as a forfeiture of part or all of the interest that have been earned on the account. This penalty applies to earned interest and principal.
Renewal Policy. Certificate of Deposit accounts will automatically renew for another term upon maturity. You have a grace period of seven days in which to change or withdraw the funds without being charged an early withdrawal penalty.
Exception to Early Withdrawal Penalties. At our option, we may redeem the account before maturity without imposing an early withdrawal penalty under the following circumstances:
- When an account owner dies
- or is determined legally incompetent by a court
- or other body of competent jurisdiction.
Nontransferable / Nonnegotiable. Your account is nontransferable and nonnegotiable. The funds in your account may not be pledged to secure any obligation of an owner except obligations with the Credit Union.
FEES FOR OVERDRAWN ACCOUNTS. Fees may be imposed on each check, draft item, ATM card withdrawal, debit card withdrawal, debit card point of purchase, preauthorized automatic debit, telephone initiated withdrawal or any other electronic withdrawal or transfer transaction that is drawn on an insufficient available account balance. The entire balance in your account may not be available for withdrawal, transfer or payment of a check, draft or item. You may consult the Funds Availability Policy for information regarding the availability of funds in your account. Fees for overdrawing your account may be imposed for each overdraft, item or transaction. If we have approved an overdraft protection limit for your account, such fees may reduce your approval limit. Please refer to the Rate and Fee Schedule for current fee information.

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Preferred Checking

Clear Card

Second Chance Checking

Minimum Opening Balance

Suggested opening amount- $25

ID Safe Choice Charge Possible

Yes

Direct Deposit

Accepted and encouraged

Dividends Paid

Privilege Pay

Available after 90 days

Overdraft LOC

Available immediately, with approved credit

ATM/Debit Card

Instant Issue

Shared Branching

Available

Free Bill Payer