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credit union loan

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  • 23-01-2008 11:52am
    #1
    BlueIsland
    Registered Users Posts: 487 ✭✭


    I am intent on sorting out finances and starting to save properly this year.my question is oin relations to loans. I have a loan from credit union (car) which I pay 240 a month off. (40 euro worth of shares). there is 5500 left on this. I have a personal loan from AIB worth 2270. I pay 80 euro a month on this. I might have this wrong but i think i am paying 12.5% interest with aib and only 6.99% with credit union. Should i top up credit union loan and payment per month, pay off AIB and be paying one interest rate per month????? Hope that is understandable. help would be appreciated.


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    #2
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    Could be right. If the credit union will lend you the money, pay off the higher interest rate loan and increase payments back to the credit union. If at any stage your savings are greater than the loan amount, pay the loan off from your shares. Simple maths.


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    #3
    whyulittle
    Registered Users Posts: 3,878 ✭✭✭whyulittle


    broker2008 wrote: »
    If at any stage your savings are greater than the loan amount, pay the loan off from your shares. Simple maths.

    Unless you have an immediate need to get rid of the loan, it's cheaper to pay it off in installments. You make money more through your dividend on shares & interest rebate, than what they'll be charging you interest on your loan.


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    #4
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    whyulittle wrote: »
    Unless you have an immediate need to get rid of the loan, it's cheaper to pay it off in installments. You make money more through your dividend on shares & interest rebate, than what they'll be charging you interest on your loan.

    Is the loan rate not greater than the savings rate ?


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    #5
    kippy
    Registered Users Posts: 18,473 ✭✭✭✭kippy


    Credit Unions in general wont top up car loans as far as I know. You'll a seperate loan as the car loan is at a special reduced rate.
    Kippy


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    #6
    whyulittle
    Registered Users Posts: 3,878 ✭✭✭whyulittle


    broker2008 wrote: »
    Is the loan rate not greater than the savings rate ?

    It was put to me by my local Credit Union was that it was cheaper to take out a loan of say 5,000 for a car, rather than take it out of your savings, as the dividend is calculated on the lowest balance every month. It wasn't a case of them trying to keep my money in my account and take out a loan with them, as I wasn't looking for a loan at the time, I was just questioning the dividend paid.


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    #7
    branners69
    Registered Users Posts: 2,696 ✭✭✭branners69


    Isnt another benefit of the credit union that they charge interest on the decreasing loan amount. As in with AIB they charge the same interest rate on the same amount for the term of the loan. With the credit union they charge the same rate but every year the loan amount is decreased by what you have paid off in the previous year! This obviously means your repayments will decrease to next to nothing once the loan is nearing its end of term.

    Hopefully the above is clear?


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    #8
    broker2008
    Registered Users Posts: 750 ✭✭✭broker2008


    whyulittle wrote: »
    It was put to me by my local Credit Union was that it was cheaper to take out a loan of say 5,000 for a car, rather than take it out of your savings, as the dividend is calculated on the lowest balance every month. It wasn't a case of them trying to keep my money in my account and take out a loan with them, as I wasn't looking for a loan at the time, I was just questioning the dividend paid.

    One has to look at the total cost of the credit.

    I can remember a credit union member telling me that they had taken out loan out with the CU only to lodge the money with the same credit union because the CU had rung him to say that he was eligible for the loan ! It goes without saying that the loan interest rate exceeded the rate on offer for savings.


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