Will loans from credit unions become more popular?

A recent report has suggested that an increasing number of people may be turning to credit unions in a bid to get loans and other forms of finance, as a result of mainstream lenders tightening their belts on offering finance because of the effects of the credit crunch and high bad debt levels.

In the past consumers had to have a common link in order to gain access to a credit union, such as working for a particular employer or living in a particular area. However, the government is introducing new legislation to make it easier for more consumers to gain access to credit unions, which are able to provide borrowing at very low rates as well as other financial services.

One industry official stated: ‘Borrowers should always check out the loans available at their local credit union. ‘Many people think credit unions are just for savers. But they offer affordable loans with low and transparent interest rates. Most charge no more than 1% per month in interest. They are a safe and accessible option for many.’

Tighter credit conditions may mean that more people are unable to get loans and finance through banks and other lenders, and this could see a boom for credit unions if accessibility is made easier.