All other members will decide
after considering the problem...
whether he or she deserves this funding to be provided to him or her immediately or the fund should be given to a regular borrower to earn more profit.
The rules and regulations of a cooperative society
Important basic knowledge on credit unions
The credit unions can simply be put as a choice for the traditional loans. Various people do not like the concept of bank loans as they think that it creates too many problems for them. The financial records of a person are sometimes not so good, or he is not in good financial situations that disallow him to have access to bank loans. Sometimes, there can be a situation where the people are facing such problems that they do not have time to fulfill the rules and conditions of the bank loans and then get the desired financial assistance for themselves. There can be many reasons for which a person might not choose the options of bank loans in comparison to other alternatives available.
It is very important that whatever option is selected should be trustworthy & legitimate. The credit unions are one of such kind that can be relied upon by you. Though, the Credit Unions are the closed groups, people who have not dealt with it do not have knowledge about its working. It cannot be called as ignorance, but when you remain out of the league in something, you cannot fully understand what is cooking inside it. Many people feel nervous about this credit union concept as they do not have full knowledge about this awesome idea of providing financial assistance to people with their savings and how the credit unions works for creating saving habits in the mind of the people. This article here deals with some basic issues of the credit union to provide you knowledgeso that you can fully understand that what is meant by credit unions and how people deals with credit unions to take assistance when they are in grave financial problems.
Before, proceeding to understand the deeper concept, let's concentrate firstly on the basic definition of the credit unions.
What do you understand by the credit unions?
The credit unions are a form of a cooperative society. It is a cooperative society that deals with the financial savings of the people and providing financial assistances to the members of the group. In a credit union, you find a financially cooperative system that is run by the members of the group. The credit union is kind of a group, where the control of the groups and the rules and regulations are totally determined by the members of the group. The members of the credit union deposit a certain amount of fees after a certain time to maintain their membership with the group. This group is operated for some certain goals. These goals are: first of all, the cooperative societies are managed with a goal to promote thrift for the members of the group.
Secondly, when you are a part of a credit union, you will avail credits at competitive rates as the cooperative union has the goal to provide the credit assistance to its members at a competitive rate, so that the members do not have to roam around from bank to bank for their desired credit assistance, and also, they do not get robbed by the illogical bank rates. The third goal of the cooperative society is to put an effort in the development of the community, of which the cooperative society belongs to. The members of the cooperative societies are financially capable and, matured persons. When they are progressing in their life with the concept of cooperating with each other, it is certain that the community also expects them to cooperate and contribute to the development of the community.
Different types of credit unions:
The credit unions are made by the members who voluntarily agree to cooperate with each other. That is why; the rules and regulations of a cooperative society also vary by the will of the members of cooperative societies. It is because the operation of cooperative societies or the credit unions is democratically handled by the people who are the members of the very group. So, it is certain that the rules and regulation they would agree to for their cooperative group would be different than the other existing credit unions or mutual savings groups.
That is why, it has been noted that there are several types of credit unions all across the world, and each differs significantly from another. Let's get to know some of these significantly different groups from each other:
The credit unions all across the world vary depending on the asset sizes. The asset size that are used in operation creates a lot of difference in the operation style of the credit unions or the mutual savings systems, to the rules and regulations, to the way it involves in community works and many more. The asset size can vary a lot. There are credit unions or mutual savings that are currently operative with a billion dollar asset funds and has thousands of voluntary members with completely institutionalized organizations.
Methods of operations of the credit unions:
The credit unions can work in several ways. Some might set up a simple rule where they would recruit members with an agreement that as a member of the union they will provide a certain amount of money towards the fund of the union after each periodical time. The members of the credit unions can also take loans from these funds but within the limits prescribed. First of all, the fund size decides that to what limit, the loans can be allotted to its members. There are also other things that need to be clarified. The rules and regulations of the credit unions shall deal with the matters such as whether they willprovide the financial assistances or credit union loans to people outside the union or not. In other words, whether the credit union would be limited to the members of the unions or it would expand its financial dealings outside the union as well. Some credit unions limit their business within the union.
Well, some credits unions believe in putting their money into a company. Of course, when a lot of people are putting their money into the same fund, then the size of the fund will become bigger. So, the funds of a credit union can easily be dealt with fund of unsecured money lenders.. So, this is how some credit unions get into the professional money lending business by proving their money to the traditional borrowers. The profit they earnby providing these loans as the interest rates and the loan fees are added to the mutual fund, and the profit is distributed among the members of the union according to the ratio of their contribution to the fund.
Thus, the credit union can become a profitable venture for the members if they all agree to save their money for the business. Though, some credit union does not choose to do so. They keep their fund limited to their access only. So, when a member of the group is in need, he or she can get access to these funds immediately. On the other hand, when a member of the credit union is involved in the money lending business and needs money, he or she has to get approval.
There is also a difference between taking loans from a regular bank and mutual credit or credit unions. It is that you can get the loans at a very competitive rate and without much documentation that is quite hard to find.