Joining a club is super awesome because it makes one feel like they belong. The right one comes with perks and benefits. A cooperative kind of works the same way. Find out what a coop is and how you can get a loan through one!

Credit cooperatives may not be the first thing that comes to mind when you’re in need of a loan. Because we’re so used to traditional banks and online loan companies, these tend to be brushed over, especially by the younger generation.

A nice thing about cooperatives is that profit isn’t their main goal. They aren’t here to make money, but to serve a purpose according to the type of cooperative and give benefits to the members who make the organization. Think of it like some sort of club!

Learn more about cooperatives, how they work, and all the kinds of loans you can get from one right here.

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What are credit cooperatives?

Cooperatives are also known as credit unions. These are financial institutions that are similar to banks, except they are owned by the customers themselves and exist for their benefit as well. They do not exist for profit, compared to banks. There are varying types of cooperatives that are there for different purposes, such as for agriculture, housing, health, and many others. Cooperatives are obliged to follow their specific purpose and they also offer different financial products like home loans, student loans, auto loans, etc.

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Pros and cons of taking out loans from cooperatives in the Philippines

Pros of Cooperatives:

1. You’re part of the community - Credit unions involve membership, so ideally, you would be a member with dividends and benefits.
2. Low interest rates - Most cooperatives in the Philippines offer around 1-2% interest monthly compared to the more expensive rates given by online platforms and digital banks.
3. Good customer service - Because this is a smaller organization, there is more room to be customer-oriented and friendly, so you can expect better customer service from being a part of a cooperative.
4. Easy application and flexible plans – Some of these cooperatives operate online so application would also be hassle-free and there are many installment terms that cater to its members.

Cons of Cooperatives:

1. You need to pay a membership fee – Of course, to become a member of a cooperative, you must first pay a membership or subscription fee. This would also vary according to the cooperative you choose.
2. Not very accessible – There aren’t as many credit cooperatives locally as there are banks. It’s highly likely that there may not be one near your home or workplace, and this may be a disadvantage to some borrowers out there.

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Types of loans being offered by cooperatives

Credit cooperatives actually offer multiple types of loans that’ll cater to their members’ needs! Of course, it would all differ based on the cooperative you choose to be a part of, but the majority of them have the more common types of loans under their belt.

1. Personal Loans – The most common unsecured loan out there which you can use for the most varied of purposes, from paying for a wisdom tooth removal to doing home renovations.
2. Home Loans – A home loan is something people get when they want to purchase property, like a house or a condo.
3. Auto Loans – Need a sweet new ride? An auto loan is the loan you’re looking for.
4. Education Loan – Use this if you want to further your or your family’s education and pay for tuition fees or other school-related expenses.
5. OFW Loan – This loan is designed for overseas Filipino workers who are in need of financial assistance.
6. Emergency Loan – As mentioned in its name, this loan can be applied for in cases of calamities or emergencies, such as a sudden death in the immediate family or a home being ravaged by fire or storm.
7. Small Business Loan – Thinking of starting your own little enterprise? This is the loan that can kickstart your business!
8. Agri-Finance Loan – This type of loan is made for small, rural farmers to increase investment in their farms and assist with their finances.

Note that credits cards are something that credit cooperatives do not offer. Loans are their main financial product and should you need a credit card, try banks instead.

Not sure which loan you should apply for? You can read our extensive blog about different loans in the Philippines and see which is the perfect one to fit your situation.

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How to get a loan from credit cooperatives

To get a loan from a credit cooperative, you must first become a member of that cooperative. Here are the steps from applying to one up to getting a loan from them online.

1. Choose the credit cooperative you wish to join and then attend a pre-membership seminar – This is usually held in a branch or office of theirs. The seminar tackles everything about the coop, including operations, values, and other necessary aspects about it.
2. Accomplish a membership form and submit it along with the requirements – Fill it out with all the information needed. Again, like all applications, make sure the information you place there is accurate. Requirements also vary from coop to coop, so check these online first.
3. Pay membership fees and wait for approval – The membership fees also include your initial deposit into the coop. They’ll eventually notify you via SMS or email, so wait patiently.
4. Look through the coop’s website to check the types of loans you can get – Got in the coop? Woohoo! Now you can browse through your loan options on their website. These range from different types that we tackled in the earlier part of this article.
5. Prepare requirements – Some coops only need you to fill out an application form to get a loan, but others require you to show documents like a Certificate of Employment or Driver’s License, depending on the kind of loan. Make sure you’ve got all these ready.
6. Fill up the online application form – They'll respond to you on the status and next steps (if there are any) in a few days' time.

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Top credit cooperatives in the Philippines

Thinking of getting into a credit cooperative in the country? Make sure they’re reputable and well-known—check this list of some of the top credit cooperatives in the Philippines, with most of them based in Metro Manila and other major cities.

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Credit Cooperative FAQ

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What are the requirements for cooperative loans?

We’ve mentioned this earlier on, but again, it depends on the type of loan you’re getting! For example, if you’re applying for petty cash from Ayala Coop, all you need to do (aside from being a member) is fill out an application form. If you’re applying for a small business loan, you may have to show your barangay or mayor’s permit, barangay or court clearance, and other documents related to the loan type. It’s diverse, so check your coop’s website first and foremost for the complete list of requirements and eligibility!

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How much is the interest rate for cooperative loans?

Interest rates for cooperative loans range from as low as 0.5% p.m. to 3% p.m! Again, this all depends on which cooperative you decide to join and the type of loan you’re looking at.

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What’s the maximum amount you can borrow from Credit Cooperatives?

Cooperatives may loan you a minimum amount of PHP 1,000-2,000 and a maximum of PHP 2,000,000-5,000,000. Check the cooperative you’re interested in and view their many loan offers.

Sources:

• List of Best Cooperatives
• How to Invest in Cooperatives in the Philippines
• Ayala Coop Petty Cash
• Barangka Coop Loans