Credit union loan

Evo

Right I've lodged 3229 euro into my credit union account over the last 6 months. Last week I went in and got a loan for 4000 as I'm buying a car for 7000. However 2 days ago when I went in to get out 3000 form my account they said I couldnt as its used as collarteral (spell?) against the loan. So if I cant touch the money I lodged, basically I got a loan for 800 euro from?!

My friend got a loan for 7000, while unemployed and gave them 500 euro when he got the loan.

So why can't I take out the 3000 in my account? Should I extend my loan to 7000 and they can keep my 3229 as collateral, but then does that mean I have to pay back 7000 before I can touch the 3000 which defeats the purpose of a loan or even using the credit union!

DarkJager

Yeah you're in the same position as me! Have about 1500 euro in savings but they somehow decided to use it as collateral against a loan of 4000 euro. I think the way it works is that they allow you to "dissolve" the savings into the loan once it reaches the amount of the savings. Just means they get paid back faster.

Shifty

Thats how Credit Union works, you borrow against your savings, most credit unions allow you borrow double your savings on your first loan after a period of saving for about 6 months. Your loan is secured on your savings.

Savings can be withdrawn from your credit union at no charge, provided the savings are not pledged as security on a loan. You are encouraged to keep your savings intact, so that:

They continue to earn a dividend, they continue to benefit from the Life Savings Insurance protection. You maintain your credit worthiness and capacity to borrow

A credit union loan has some very special features:

Loans are insured at no direct cost to the eligible member.
Repayment protection insurance is available as an optional extra.
No hidden fees or transaction charges.
Repayments calculated on the reducing balance of the loan. This means smaller interest repayments as you repay your loan.
Repayment terms to suit your particular circumstances.
Flexibility -you can repay the loan earlier or make larger repayments than agreed with no penalty. Additional lump sum repayments accepted with no penalty.

stepbar

Have you actually signed anything which states (in the terms and conditions) that the credit union is taking your savings as security on your loan? Unless it's in writing and unless it was pointed out to you from the start; it's not legal and cannot be inforced. The Financial Regulator might be your next avenue of recourse.

Mocking Burd

If you check the Promisory Note you would have had to sign for the loan, then it will have the savings amount listed as collateral against the loan.
When you are at the stage when your loan is less than the amount in your savings account - you can use this to pay off the rest of the loan, if you so wish.

Saruman

Was it not explained to you? I mean they told me when i got a loan of.. about 15k that i could not touch the money in my account and advised i keep adding money into it.

They are great for loans though, i mean i just became broke for the first time. Everything came at once along with 2 holidays and i lost track of our finances so was down to minus in the bank. All sorted now, got an overdraft. Anyway i called the credit union and asked them could i skip a payment, they said sure we will add a note and just start paying it back when you can. They also said if i went down to them i could extract the payments from the money i have in my account.

Anyway like i said though... they usually explain it that you can not touch it while you have a loan.