Amidst all of the economic turmoil we have been experiencing there has been a tremendous amount of talk a bout a consumer credit crunch. While it is true that some lenders do not have much money to lend that is not true at credit unions.
How can that be? Credit unions follow a very simple, tried and true business model. They take deposits from individuals and carefully lend them out to people who live and work in the community. This contrasts with many huge lenders who gather the funds they lend by selling bonds and securities. Now that the so called capital markets are in a constant state of flux it is hard for these lenders to raise the money that they need in order to make loans.
Credit unions on the other hand are seeing an overall increase in deposits because consumers are looking for a safe sound place for their money. The credit union can make that money available for loans.
It is important to remember that credit unions have sustained their business model through the years by adhering to sound lending principles designed to safeguard the deposits that have been entrusted to them. Credit unions will go the extra mile to help people get loans but they are also going to make sure that borrowers do not take on debt that they can not repay..