Credit Union Customers love their credit unions. They love the level of service that they get and they love the relatively low rates for loans and high rates for savings. Much of this love is not reciprocated. Credit Unions, if you are ever forced into a bankruptcy proceeding are fond of forcing reaffirmation agreements and enforcing their nearly ubiquitous cross-collateralization and future advances clauses. These are things that you almost never have to worry about if you get your financing elsewhere.
Customers must beware. If you take out a loan with a credit union because they offer you a great rate, beware of the details. You will likely be signing a loan document that includes language allowing them to hold on to your title until you pay any other loan that you have with them. If you are a credit union customer and you have a credit card through the credit union the credit card agreement may include language allowing them to secure that card to any future security interest that they hold. For example, you get a credit card, you happily use it and are happy with the rate, you then decide that you want to get a car loan through the credit union because they are offering a great rate. Now the car loan is obviously secured by the car, what is not obvious to almost everyone is that the credit card is also secured by the car. This means that after you have paid off your car loan, the credit union can withhold your title until the credit card is paid off. The same goes for personal loans with credit unions. [Read more…]