Member loans – How they work and the difference between private loans

Member loans – How they work and the difference between private loans

A member loan is a loan that you can take out through banks or associations and organizations of which you are a member. The fact that the interest rate is standardized has both advantages and disadvantages, unfortunately usually disadvantages – read more about it below. In Sweden, it is common for unions to offer member loans through the major banks.

What are member loans?

What are member loans?

Member loans, also called trade loans, are the special loans that the major banks usually offer exclusively to those customers who are members of any association or other organization with which the bank cooperates. Often the membership loan is linked to a membership in a trade union. As a rule, the member loan is a private loan with a variable interest rate – the interest rate changes over time, just as with a regular bank loan.

Which banks offer member loans?

Which banks offer member loans?

The major banks Best Bank, Cream Bank, Lite Lender and Capital Lender offer all member loans. Even smaller banks such as Loan & Good Finance offer member loans.

Which unions cooperate with which banks

  • Best Bank offers member loans to members of one of the 14 unions belonging to LO and SACO’s 23 different unions.

  • Lite Lender offers member loans to members in, among others, the Teachers’ Union, ST and the Union.

  • Cream Bank offers member loans to members in ST, JU$ and the Union, among others.

  • Capital Lender offers member loans to members of SACO and TCO.

  • Lån & Good Finance offers member loans to members of the Homeowners’ Association and the Tenants Association.

Since the interest rate is the same for everyone, you can quickly find out what you will get for borrowing costs. If the interest rate is lower and the fees are lower for the member loan than you can get elsewhere, the member loan can mean a lower total cost of the loan. You should consider this before you sign up for a member loan.

Sometimes a basic loan protection is included. At Cream Bank, it is a life insurance that covers a loan debt of up to $ 150,000 in the event of death. It also includes an interest payment protection that pays interest expense on the loan up to $ 2,000 per month. The protection applies in case of accidents, unemployment and certain diseases.

Best Bank includes a group life insurance and a payment protection in the member loan. Group life insurance settles the debt that remains if the borrower dies. Payment protection can provide compensation if the borrower becomes ill or unemployed. The remuneration is to cover amortization and interest at a maximum of $ 2,000 per month.

Disadvantages of a member loan

Disadvantages of a member loan

The big problem with member loans is that all customers receive the same interest rate. This means that those who have a very high risk (and therefore often receive a high interest rate from the bank) also receive the same member loan interest rate as the other customers. In practice, this means that all customers with a normal economy can compensate for the proportion of customers with poor finances. If you have a normal economy or are attractive to banks and lenders, it may very well be cheaper to take out a regular private loan instead. If you choose a regular private loan and want a security insurance it is often possible to take out at the same time.

Another disadvantage is that the loan amount for a member loan often has a lower amount limit than that for a regular private loan. For example, Best Bank, Cream Bank and Lite Lender all have a maximum loan amount of $ 350,000. If you need to borrow more than $ 350,000, a private loan without collateral is therefore a good alternative. With Astro Finance you can apply for a loan amount of a maximum of $ 600,000.

We will be happy to help you when you compare your bank loans – regardless of who you are or what you do. We offer a favorable security insurance and if you want to collect loans we will help you with that too. If you have more questions about the differences between bank loans and member loans, you are welcome to contact us at Astro Finance.

Compare the banks with Astro Finance

When you are borrowing, you should always compare the banks’ offers before deciding on member loans or private loans. All banks specialize in different types of customers. It is therefore not possible to say that one bank is better than another when it comes to loans. Thus, it is important to compare different loan offers to find which bank suits you best!

If you as a private individual go to several different banks to compare the terms, they each take credit information on you. This affects your credit rating and can impair your ability to get a really low interest rate. If you choose to compare with Astro Finance, only one credit report is made. The service is completely free of charge and you do not commit to anything when you make a comparison. Instead, Astro Finance gets paid directly by the bank or lender when we help them get a new satisfied customer.

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