If you have taken out home, auto, school, or other personal loans with one of the big banks, you may be able to refinance with your new credit union. Refinancing or balance transferring your loans through a credit union will prevent your interest payments from being used to support the fossil fuel industry.
Divesting your loans may also save you money. Since credit unions are member-owned nonprofits formed for the financial well-being of their members, credit union revenues are returned back to their members in the form of lower interest rates and reduced fees that might just beat anything the big banks can offer.
Refinancing a personal loan is a major financial decision. Beyond the desire to divest from fossil fuels, there’s a lot to consider:
1. The obstacles for divesting your loans will vary depending on your credit, financial situation, and age of the loan.
2. The best time to refinance your loan is usually when it is less than two to three years old.
3. Ask your loan officer about any possible fees or penalties that may result from a loan transfer.
4. A reduced rate may sound great, but also consider a shorter loan term for maximum benefit.
If you do decide that the time is right to divest your personal loans:
1. Gather your documents. Retrieve any documents provided by the bank related to your current loan, such as your loan contract and deeds. The new lender will likely require you to provide your current financial records as well, such as your bank statements and proof of income.
2. Talk to the credit union loan officer. Let your new credit union know that you are interested in refinancing a loan with them, and they will have a loan officer contact to discuss further details and provide the information necessary to complete the process. They will likely gather information to verify your credit, income, and loan-to-value ratios. Feel free to ask the loan officer about any and all questions you may have about refinancing.
3. If refinancing is approved, the credit union will contact your existing lender to purchase the loan. Communicate with the loan officer to ensure that you have done everything necessary to finalize the transfer.
The feeling of moving a whole house-worth of money out of a big bank that’s funding the destruction of the planet is priceless, but do your research. If it isn’t financially feasible at this time, that’s okay! The next time you do need a loan, you can take it out at your new credit union and be sure that the interest will be reinvested in your community instead of fossil fuels.