Is Getting a Loan a Good Idea?

Are you considering a loan for a new car, a household project, or for a similar costly expense or project?   You need to weigh and  consider various factors before making the decision to seek out a loan with your local credit union.

Factors you need consider about the current status of your personal finances: 
  • Is a loan really necessary for this project, vehicle purchase, vacation, etc?
  • Your credit score – is a healthy score, too low or do you have a credit history?
  • Have you had a recent or past bankruptcy?
  • The status of your repayment history – do you have a poor repayment history, your bills are in collection, or you have recently bounced checks?
  • Have you recently had a vehicle repossessed or home foreclosure?
  • How much money do you want to borrow? 
  • How much money can you actually borrow?
  • Should you consider a co-signer for the loan?
Factors to consider about the make-up of the loan: 
  • From where will I obtain the loan?
  • What is the best type of loan for me?
  • What are the requirements of the loan application process?
  • Is there a cost to apply for the loan?
  • How much is the lender will to loan me?
  • What happens if I am denied a loan?
  • Once I have the loan, is there a way to cancel it? 
  • Where can I find the best interest rates?
  • How will I receive the loan monies?
  • What is the repayment length and expectations of the loan?
Knowledge is power, so do your homework.  Research your loan options and ask questions of yourself and loan counselors before borrowing money for that new car, home project, or vacation!
Do you still have questions, comments or concerns about whether a loan is a good idea for you?  Please contact your local Credit Union representative for answers to your question or loan counseling and recommendations.

How does an MBL cap affect me?

You may have read or heard about mention lately of MBL, or member business lending, caps. The MBL caps set by Congress limit lending based on the assets or net worth of the credit union. A well-capitalized credit union can lend up to 1.75 times its net worth or 12.25% of total assets, whichever is less.

Credit union lobbyists are expected to push for passage of legislation raising the MBL cap to  27.5% of total assets when Congress returns after Labor Day. What would an MBL cap raise mean to you? If you're a small business owner, it can mean a lot.

Even though credit unions have plenty of capital stored up that could be lent to small businesses, many active lenders near or at their cap have to either slow down or stop lending to stay within their MBL cap limit. With the economy still suffering through a credit crunch, it has been estimated that raising the MBL cap will result in an additional $10 billion in new, non-taxpayer-backed funds into the economy, creating as many as 100,000 new jobs.

At a time when banks are withdrawing credit from America’s small businesses, credit unions have actually been expanding credit to small businesses, but with more credit unions approaching the cap, this growth is threatened. It makes economic sense to permit credit unions to lend additional capital to their business-owning members.

In the meantime, we'll keep an eye on the news to see how the battle of MBL caps will play out.