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credit union vs bank loan..

  • 15-08-2010 5:54pm
    #1
    tfak85
    Registered Users Posts: 1,068 ✭✭✭


    i need some advise, i am a very regular saver in the CU and have taken a couple of small loans and paid them back very promptly (keeping a good track record)..
    i am going to take quite a large personal loan, prob before the end of the year, about €15000, this is to cover the cost of our wedding and honeymoon and buy our first car&year one of insurance... we will be paying the loan back between us equally, are both in very secure employment etc..

    my question is this:
    is it more worth my while taking a personal loan from the bank (never had any financial issues) or from the credit union.. are credit union loans cheaper in the long run than bank loans?
    we would also hope that by the end of next year we can buy our own home, the deposit from which will come from the CU also...


Comments

  • #2
    amdublin
    Moderators, Category Moderators, Arts Moderators, Entertainment Moderators Posts: 20,644 CMod ✭✭✭✭amdublin


    tfak85 wrote: »
    i am going to take quite a large personal loan, prob before the end of the year, about €15000, this is to cover the cost of our wedding and honeymoon and buy our first car&year one of insurance... we will be paying the loan back between us equally, are both in very secure employment etc..

    my question is this:
    is it more worth my while taking a personal loan from the bank (never had any financial issues) or from the credit union.. are credit union loans cheaper in the long run than bank loans?
    we would also hope that by the end of next year we can buy our own home, the deposit from which will come from the CU also...

    *shakes head in disbelief*

    I can give you advice but I honestly do not think you will take it.


  • #3
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,905 Admin ✭✭✭✭✭Toots


    If you're planning on buying your first house in the next year then you'd be crazy to take out a loan of this size, as it will seriously affect the size of the mortgage you're eligible for.

    Also if you need to borrow to get your deposit, you really shouldn't be applying for a mortgage at all. To give yourselves the best possible chance of approval, you should ideally be going in with your application free of debt.

    It doesn't really matter whether you take the loan out with the CU or the bank, but if I were you, I'd think very carefully about it before you do.


  • #4
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    shocking! you want to get deposit from CU for house. Thats really bad practice but you obviously wont tell the CU its for a deposit as they would send you packing.

    If you are both in secure employment what about saving? If you cant save i would be worried about your financial capabilities as you have no backup if something does happen to you financially.

    Bank or CU. doesnt really matter. get the one with the lowest rate.


  • #5
    tfak85
    Registered Users Posts: 1,068 ✭✭✭tfak85


    chris85 wrote: »

    If you are both in secure employment what about saving? If you cant save i would be worried about your financial capabilities as you have no backup if something does happen to you financially.

    thanks for all your replies. i've just read back through my post and realised that it makes me sounds really thick...:o

    we do save chris85, i save 300/month and he saves 200/month, we have almost 10,000 in savings as it is and are using a small amount of this towards the costs mentioned in the OP, i would just rather take a loan to pay for the bulk of these, pay it off over ~2years and still have a good chunk of savings there then just top up this same loan to facilitate the purchase of our first home - having a good size deposit and therefore a (slightly) smaller mortgage...


  • #6
    jor el
    Closed Accounts Posts: 16,713 ✭✭✭✭jor el


    Getting a 15k loan now will not help your chances of getting a mortgage in a years time. Also, a lot of banks are now asking for a CU statement, to show you have no loan on the books, this is because the banks can't check with the CU themselves, and the CU loan doesn't appear on the ICB report. If you pay into the CU by direct debit, they'll know you have a CU account.

    The 10k savings you have would make a nice piece of deposit, and better again if you can double that by the time you apply. Getting a loan though will pretty much kill any chance of a mortgage.

    You probably need to re-evaluate your finances, and decide what you want to do. Wedding, car, insurance and a house all go into a pot, and you pick out the ones you can afford. It all depends on your priorities.

    If you do go down the loan path, then whether you get it from the bank or CU will not make much of a difference. You will not be able to hide loans from the bank when applying for a mortgage. CU is probably more expensive, but they often let you pay off your loan early without penalty, and without incurring the interest that you would have paid over the full term.

    Both of you need to sit down, go through all the finances, and come up with a proper plan.


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  • #7
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    jor el wrote: »
    Getting a 15k loan now will not help your chances of getting a mortgage in a years time. Also, a lot of banks are now asking for a CU statement, to show you have no loan on the books, this is because the banks can't check with the CU themselves, and the CU loan doesn't appear on the ICB report. If you pay into the CU by direct debit, they'll know you have a CU account.

    The 10k savings you have would make a nice piece of deposit, and better again if you can double that by the time you apply. Getting a loan though will pretty much kill any chance of a mortgage.

    You probably need to re-evaluate your finances, and decide what you want to do. Wedding, car, insurance and a house all go into a pot, and you pick out the ones you can afford. It all depends on your priorities.

    If you do go down the loan path, then whether you get it from the bank or CU will not make much of a difference. You will not be able to hide loans from the bank when applying for a mortgage. CU is probably more expensive, but they often let you pay off your loan early without penalty, and without incurring the interest that you would have paid over the full term.

    Both of you need to sit down, go through all the finances, and come up with a proper plan.

    +1

    I would imagine you will find it very hard to get a mortgage with a big loan on your bank and little savings.


  • #8
    MaxCharlie
    Registered Users Posts: 156 ✭✭MaxCharlie


    The only advise i would give is - think very very hard about what to do - if you don't have the cash to get married - or buy a car or worse again to insure it you should not be doing it until you have saved up - Saving €500 at present per month is only going to go towards paying off your loan in the future, then you will have no money for savings or to keep aside for emergencies i.e. telly breaking, car service, tyres, home heating oil, petrol, sky, health insurance, let alone a holiday - that's just my opinion. but it doesn't cost much to get married - if your not into the big frills etc. you could also buy a cheap older car - this is to avoid getting into a financial mess later on. you may be able to save now, but this is without having a house or mortgage and the expense of owning a house, or a car - save save save and buy when you have saved up ....my opinion


  • #9
    Pythia
    Registered Users Posts: 7,469 ✭✭✭Pythia


    I imagine from your user name that you were born in 1985, meaning you're only 24 or 25 right now. A wedding, honeymoon, car and house are all huge on their own. Unless you are very wealthy, you probably can't afford all of them right now. You have loads of time to get them all done, why do them all at once?

    If I were you, I would get saving and save the wedding and honeymoon until you are better able to afford them.


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