Credit Unions?

giftgrub

Thinking about joining a credit union, just wondering what the story is with them and what their rates for loans are like compared to the banks...any info greatly appreciated.

spongebob

Well worth it for loans up to about 10k and ESPECIALLY for loans under 5k

M

ishmael whale

There is one thing to watch about Credit Union loans. You may find that, say, a €10,000 loan from the CU is cheaper than a €10,000 loan from a bank. However, typically the CU expect you to keep an amount on deposit for the life of the loan, but the bank typically don’t. So if, say, the CU require you to have €1,000 on deposit to get your cheaper 10K loan, the correct comparison is against a €9,000 loan from the bank. And usually that means the banks are cheaper.

dahamsta

Used to be that the CU would give you four times your savings as a loan. Dunno if that still applies.

Ishmael whale, personally I'd think that only applies if you consider not being able to get to the savings a downside. I look on it as an upside, but that's just a matter of personal taste.

adam

(gah, load -> loan)

spongebob

Originally posted by dahamsta
Used to be that the CU would give you four times your savings as a load. Dunno if that still applies.

3-4 for new members (3-6 months with the CU) and up to 6 in some cases for established members who fight their case at the counter . I always try to keep €2k in there coz ya never never know

M

ishmael whale

Borrowing with money in a savings account does not make financial sense. The interest paid on savings will always be less than the loan rate. If the CU require you a deposit for the duration of the loan then they are effectively lending this money back to their customers at interest.

Psychologically there may be comfort taken that at the end of the CU loan there is ‘still’ an amount of savings. However, this is only psychological. If the customer used their savings to reduce the amount borrowed they would actually have more money in their pocket.

It is a matter of personal preference. People might borrow from a particular institution for any amount of reasons. Maybe it’s the first door they cross and they couldn't be bothered to look for a better deal, maybe they decide to give their business to the bank with the prettiest girl in its promotional literature. But borrowing from a Credit Union is frequently not the cheapest option for people who have the alternative of getting a bank loan, because of the requirement to have an amount on deposit.