5 Myths About Loans: Debunked

  1. Myth: If you have bad credit your only options are payday and doorstep lenders.

While you may have trouble getting a loan from a high street bank, payday and doorstep lenders are not the place to turn to. They often have interest rates through the roof, and you will ultimately end up in a worse financial position. Luckily, credit unions offer loans for people with bad credit or no credit at fair rates. Click here to learn more about applying for a loan from Nottingham Credit Union.

  1. Myth: Applying for a loan is complicated and time consuming.

Applying for a loan is really not as scary as it sounds. To apply for a loan at NCU, all you have to do is fill in a short application form answering some questions about your finances so we can determine how we can help you. Decisions are made quickly and on a case by case basis so your individual needs are taken into account.

  1. Your credit rating will be damaged by a rejection.

A rejection shouldn’t do much damage unless you have made multiple applications with different companies. To protect your credit rating, your best bet is to only make one application.

  1. Myth: Taking out a loan will just make my debt situation even worse.

If you have multiple debts with different interest rates, it might benefit you to consolidate them by taking out a loan to pay them off that has a lower interest rate. It is also a lot easier to manage one payment plan rather than several different ones. If you make your monthly payments and pay off the loan on time, it will end up improving your credit score.

  1. Myth: There is an advantage in applying for more than you need.

You might believe that asking for more than you need will allow you to pay off the first payment of your loan, or even increase your chance of getting approved. However, lenders will only give out loans that it believes a borrower can repay, and you may end up in more trouble if you end up with repayment terms that are beyond your means.

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Top 10 Credit Union Myths

 

Many people could benefit from joining a credit union, but their misconceptions could be preventing them from joining. We are going to debunk some of these credit union myths and hopefully reduce the confusion about credit unions.

  1. Credit unions have strict eligibility requirements.

While there are eligibility requirements for joining a credit union, they are not as strict as you might think. To join Nottingham Credit Union, you only have to live or work in Nottinghamshire. Other types of credit unions may require you to be a member of a union, a church or have attended a certain university. It is very likely you are eligible to join at least one credit union. You can check which ones you can join here.

You may even be eligible to join our Payroll Pro scheme if you work for one of our payroll partners. This entitles you to exclusive rates and offers. Find out if you are eligible here.

  1. Your money isn’t protected by insurance.

When you make a deposit into your Nottingham Credit Union savings account, your money is protected by the Financial Services Compensation Scheme (FSCS). Individual depositors are entitled to a claim of up to £85,000 and joint accounts up to £170,000. On the off chance that NCU or any other credit union in the UK was unable to meet its financial obligations; your money would be fully protected. Your money is just as safe in a credit union as it is in a bank.

  1. They are unlikely to be around in ten years’ time.

Credit unions have existed in the UK since the 1960s and NCU was founded in 1992. It is unlikely that credit unions will disappear; in fact, they are growing in membership every year.

  1. Credit unions do not offer rewards programmes.

This varies by credit union, but many do offer cashback rewards and incentives. NCU is now offering the Engage card, which is a prepaid debit card that can earn you up to 15% cashback at various retailers. You can find out more here.

  1. The technology credit unions use is outdated.

Credit unions may not have as big of a budget as the banks, but their technology is still up to date. Online banking is easy with NCU and most other credit unions.

  1. There are fewer places to withdraw your money.

You can easily withdraw money from your NCU savings account by BACs transfer either online or by phone. The Engage card can be used at any ATM and anywhere Visa is accepted. Most credit unions offer access to a large network of ATMs, so accessing your money is not a problem.

  1. Credit unions are only for people who are low income or have bad credit.

Credit unions can be beneficial for people of all financial backgrounds. There are many benefits to choosing a credit union over a bank; we are able to avoid added on fees such as those for early repayment, so you may find that a loan with us would be more affordable. By saving your money with a credit union, you are also helping the local community by allowing someone else to borrow.

  1. They are a good place to keep your savings, but not for much else.

Credit unions offer a variety of products such as loans with competitive interest rates and everyday banking. You may find that switching to a credit union is better for all of your banking needs as there are generally less fees.

  1. Credit unions are an old, outdated concept.

In contrast, credit unions are quite a progressive concept. With shopping local becoming more and more popular, it only makes sense to bank locally as well. Making large corporations wealthier is really the outdated concept.

  1. Opening an account is a difficult and lengthy process.

It is very easy to open an account at NCU. All you have to do is fill in an application form here. Just have your ID and bank details ready and you’re all set.

Categories: BLOG.