Should you get a credit union loan?

Joining a credit union could give you access to lower loan rates and other benefits. Here’s how they work, what loans you can get and how to apply.

What is a credit union?

It’s a non-profit financial organisation, known as a co-operative that’s run by and for its members. Each credit union is made up of a group of people that share a common bond.

You can find out more about credit unions and how they operate on the Citizens Information website.

How to join a credit union

You’ll need to find a credit union that you share a common bond with.

Living or working in the same community counts as a common bond, so you could start by checking for unions in your area. Other common bonds can include:

  • Your job or employer: You might find a union for teachers or engineers for example, or an organisation like An Post.
  • Membership of a club or society: If you belong to a club, association or society that offers a credit union, you’re eligible to join.

You’ll then need to provide proof of:

  • Your identity
  • Your address
  • Your Personal Public Service Number

You should contact the union you wish to join to find out their exact membership requirements.

What type of loans do credit unions offer?

You can apply for a loan for almost any purpose, here are some examples:

  • Back to school loan
  • Car loan
  • Christmas loan
  • Education loan
  • Holiday loan
  • Home improvement loan
  • Personal loan
  • Summer loan
  • Wedding loan

The specific loans on offer will vary from one credit union to another, but most are open to considering loans for other reasons too.

You could also get a loan to pay off other debts e.g. credit cards, so you just have one affordable payment to make.

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It only takes a few minutes to find the best loan for your borrowing needs.

Can you get a green home loan?

Yes, a CU Greener Homes loan could be ideal if you’re looking to improve the energy efficiency of your home. You could get:

  • A grant of up to 40% of the improvement cost
  • The grant application process managed for you
  • A competitive low rate loan

Here’s more on how the greener homes loan works and what type of improvements are covered.

Check that this loan is right for you by comparing it against other green home loans.

Compare home improvement loans

Why choose a credit union loan?

Getting a loan from a credit union offers different benefits to borrowing from a bank:

  • High approval stats: By looking at each application on a case by case basis, they are able to say yes to most borrowers.
  • Flexible payment terms: With most credit unions, you can choose to make weekly, fortnightly or monthly repayments.
  • Get interest back: Some unions may offer a rebate on some of the loan interest paid over the year. This could bring the cost of borrowing down further.
  • Free loan protection insurance: At no cost to you, in the event of your death, your debt will simply cease so your family doesn’t have to worry about extra expenses.
  • Repay early penalty free: If you find yourself able to pay the final loan balance before the term ends, you won’t incur any charges, and you’ll save money in interest.
  • No hidden nasties: No hidden fees or charges on loans and no admin or transaction fees.
  • Flexible loans: If your situation changes and you’re falling behind on your payments, they can be restructured to make them more affordable.

How to apply for a credit union loan

Once you’re a member of a union, you can apply:

  • By phone
  • In person at your local credit union branch
  • Online

If you apply online, you may still have to go into your local branch to finalise the loan terms.

Each credit union works a bit differently and may require different documentation or consent. So, it’s best to call your union to discuss your needs so they can advise you.

How much can you borrow from a credit union?

You could apply for a home improvement loan for up to €100,000, but other loan types have much smaller maximum values. You’ll need to check what your credit union offers, as they do vary.

The amount you can actually borrow will depend on your individual financial circumstances, your credit record and your ability to pay the loan back.

How much does a loan cost?

Each credit union sets their own interest rates so the cost will depend on:

  • the union you belong to
  • the type of loan
  • how much you borrow
  • the term
  • your credit history
  • the type of borrower you are*

*In some cases, you may be offered a discounted rate e.g. if you’re borrowing for the first time.

There is an agreed standard for the maximum loan rate however, which is 12% or 12.68% APR (Annual Percentage Rate).

You can see the average rates charged by credit unions across Ireland for different types of loans on the creditunion.ie website.

Can you get an interest rebate?

You may be able to get a rebate on some of the interest you’ve paid on a loan at the end of the financial year.

According to the Irish League of Credit Unions (ILCU) just over 50% of ILCU affiliated credit unions gave loan interest back to their members in the financial year ending September 2019, with an average rebate of 9%*.

*This is based on data analysis from 217 ILCU affiliated unions in Ireland, 2020.

Will you be approved?

This depends on your individual circumstances, but the approval process is slightly different than when you apply for a loan from a bank.

Your application will be assessed individually by a loan officer or member of the credit committee. They will consider things like:

  • Past borrowing and any savings you have
  • Your Irish Credit Bureau (ICB) report
  • Whether you can comfortably afford to repay the loan

Here’s how to check your credit report for free and ways to improve your credit score.

Why choose a credit union?

There are lots of benefits of joining a credit union, here are some of the main ones:

  • Not for profit: There are no shareholders to pay like with banks, which means you could benefit from lower rates and no product fees.
  • The personal touch: You can sort out your finances face to face or over the phone, rather than online if you wish, and most unions are run by their members.
  • Flexible approach: Credit unions may be able to lend in situations where banks can’t, e.g. a poor credit history, and can also help to restructure your payments if things go wrong.
  • Override probate rules: You can nominate someone to receive up to €23,000 from your credit union accounts when you die, without having to go through probate.

If you don’t share a common bond and are unable to join a credit union, there are other ways to borrow. Check out our credit card comparisons and loan comparisons to compare deals from the top lenders in Ireland.

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Credit union loan FAQs

How long does it take to be approved for a credit union loan?

You’ll usually get a decision on your application within two days.

What's the maximum interest rate a credit union can charge for a loan?

A credit union can’t charge more than 12.68% APR (Annual Percentage Rate) and most of their loans are offered at a lower rate than this.

How much will my credit union loan repayments be?

The amount you’ll pay depends on things like:

  • The frequency of the repayments e.g, monthly or weekly
  • The interest rate you’re charged
  • The amount you borrow
  • The term you borrow over

You can get an idea what your repayments will be by using the calculators available on most credit union websites. The interest rate used in the examples may not be the rate you get, so check before you sign up to anything.

What is the It Makes Sense loan?

It’s a loan for people who get social welfare payments and may have considered borrowing from an expensive moneylender.

You have to join a credit union to be eligible for the loan, by finding a common bond such as location, and not all credit unions in Ireland offer it.

Find out more about how to apply for the loan and which credit unions offer it on the itmakessenseloan.ie website.

How are credit unions regulated?

The Central Bank of Ireland has a department called the Registry of Credit Unions that regulates and oversees credit unions.

Being regulated means that the members’ funds are protected and the unions themselves remain financially stable.

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It only takes a few minutes to find the best loan for your borrowing needs.

Warning: The cost of your monthly repayments may increase. Warning: you may have to pay charges if you pay off a fixed rate loan early. Warning: If you do not keep up your repayments you may lose your home. Warning: If you do not meet the repayments on your loan, your account will go into arrears. This may affect your credit rating, which may limit your ability to access credit in the future. Information provided and Interest rates quoted valid at 05/10/2021