Credit Builder Loans
A credit builder loan is a type of loan designed to help members with no credit history or bad credit build or improve their credit scores.
How This Loan Works
- Loan is secured: Unlike a traditional loan where you receive funds upfront, with a credit builder loan, the Credit Union holds the loan amount in a secured account (often a certificate of deposit or savings account).
- You make payments: You make regular monthly payments on the loan, including interest, for a set period, typically ranging from 6 to 24 months.
- Credit Union reports to credit bureaus: Arise CCU reports your payment history to credit bureaus, which can positively impact your credit score if you make payments on time.
- Funds released after repayment: Once you've repaid the full loan amount, Arise CCU releases the funds to you.
Micro Loans
Micro loans are a type of small-dollar, short-term loan offered by Arise Community Credit Union as a more affordable alternative to traditional payday loans.
How This Loan Works
- Lower Fees and Interest Rates: Compared to traditional payday loans, Arise CCUs micro loan product will generally have lower fees and interest rates, making them a less expensive borrowing option.
- Longer Repayment Terms: The micro loan product offers a longer repayment period compared to payday loans, giving members more time to repay the loan and reducing the burden of immediate repayment.
- No Rollovers: Unlike some payday loans, our micro loan offering does not allow rollovers, preventing borrowers from getting trapped in a cycle of debt.
Types of Micro Loans
- MICRO I: Loan amounts between $200 and $1,000, with repayment terms of one to six months.
- MICRO II: Loan amounts up to $2,000, with repayment terms of one to twelve months.
Benefits of Micro Loans
- More Affordable: Lower fees and interest rates compared to payday lending alternatives.
- Safer Borrowing: Regulations and restrictions prevent predatory lending practices.
- Opportunity to Build Credit: Successfully repaying a Micro Loan will help members improve their credit score.
How to Qualify for a Micro Loan
- Membership: You must be a member of Arise Community Credit Union.
- Eligibility Requirements: Arise CCU has specific requirements, such as proof of income and ability to repay.
Important Note: While the Micro Loan product offering is a better alternative to payday lending alternatives, it's essential to remember that it is still a form of borrowing and should be used responsibly. Arise CCU encourages options such as creating an emergency fund, before resorting to a micro loan.
Share Secured Loan / Pledged Loan
A share secured loan allows you to borrow money from Arise Community Credit Union, using your savings account or share account balance as collateral. Arise CCU "freezes" a portion of your savings, which acts as security for the loan, while your funds remain in your account and continue to earn dividends.
How This Loan Works
- Pledge Savings: You choose to use a specific amount from your savings account as collateral for the loan.
- Loan Approval: The lender assesses your loan application and the value of the collateral.
- Funds are "Frozen": The amount you borrowed is held as collateral and cannot be withdrawn during the loan term.
- Repayment: You make regular payments on the loan, similar to a traditional loan.
- Collateral Released: Once the loan is repaid, the collateral is released, and the funds become available for withdrawal again.
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Benefits of Share Secured Loan / Pledged Loan
- Lower interest rates: Because the Arise CCU has security in your savings account, the credit union will offer lower interest rates than unsecured loans.
- Build credit: Responsible repayment of the loan can help you establish or improve your credit score.
- No credit check: Many share/savings secured loans do not require a credit check during the application process.
- Maintain liquidity: You can still access other funds in your account, and your savings continue to earn dividends.
Auto Loans
By understanding these aspects and doing your research, you can increase your chances of securing an auto loan that fits your needs and budget.
How This Loan Works
- Arise CCU provides a lump sum to purchase a car.
- The borrower/member makes fixed monthly payments, including interest, over a set period called the loan term.
- The auto loan is "secured," with the car as collateral, meaning Arise CCU can repossess it if payments are missed.
- Once the loan is repaid, the car title transfers back to the member.
Types of Auto Loans
- New/Used Car Loans: For purchasing new or used vehicles.
- Refinance Loans: Replace an existing auto loan with a new one, potentially with better terms.
- Secured vs. Unsecured: Most auto loans are secured, using the car as collateral. Unsecured loans are personal loans used for car purchases.
Factors Affecting Loan Terms & Rates
- Credit Score: A higher credit score generally leads to lower interest rates.
- Down Payment: A larger down payment reduces the loan amount, potentially lowering monthly payments and interest costs.
- Loan Term: Shorter terms result in higher monthly payments but lower overall interest paid with terms not to exceed 72 months depending on model year.
- Vehicle Age and Type: Interest rates may vary between new and used cars, with used cars often having higher rates. .
Shopping for an Auto Loan
- Check your credit: Review your credit report and score to understand your borrowing power.
- Set a budget: Determine how much you can afford, considering the car price, loan payments, and other expenses.
- Get pre-approved: Obtain loan offers from multiple lenders (banks, credit unions, online lenders) to compare rates and terms.
- Negotiate: Use your pre-approval to negotiate with dealerships and potentially get a better deal.
- Read the fine print: Carefully review the loan contract before signing, paying attention to interest rates, loan terms, and fees.
Key Considerations for an Auto Loan
- APR (Annual Percentage Rate): Represents the total cost of borrowing, including interest and fees.
- Loan-to-Value Ratio: The loan amount compared to the car's value. A lower ratio (larger down payment) is generally preferred.
- Potential Fees: Be aware of origination fees, prepayment penalties, and other potential charges. .
Overdraft Line of Credit
An overdraft line of credit is a type of loan linked to your Share Draft account that allows
you to cover transactions that exceed your available balance. It acts as an overdraft
protection, helping you avoid non-sufficient fund (NSF) fees and other charges. It's
essentially an open-end loan that can be used repeatedly, and once you pay it back, the
credit becomes available again.
How This Loan Works
When you spend more than you have in your share draft account, your overdraft line of credit steps in to cover the transaction. Arise Community Credit Union then transfers the money from your line of credit to your share draft account.
- Interest and Fees: You'll likely pay interest on the amount you borrow from the line of credit, and there might be a transfer fee each time the funds are advanced.
- Benefits: Overdraft lines of credit can help you avoid overdraft fees and keep your payments on time, even if you have a temporary shortage of funds.
- Credit Approval: Like any loan, you'll need to be approved for an overdraft line of credit.
