Clearing Credit Union Loan

vonbarracuda

Have 9k left on my loan but have 9k now in savings (shares) can I use the shares to clear the loan?
Will they look for any additional costs such as interest or is it straight forward?
Many thanks

Davy

You can clear the loan yes. Interest will depend on the loan agreement and if its fixed or variable.

vonbarracuda

So would I be right in saying I can't really clear it until I have the 9k plus whatever interest I owe them?

L5

You can in general pay off as much as you like from savings provided you keep the ratio of 1 euro in savings to every 4 euro in Loan once the payment has been made.

Davy

vonbarracuda wrote: »

So would I be right in saying I can't really clear it until I have the 9k plus whatever interest I owe them?

The figure you owe most likely includes the interest. The amount you pay every week/month say €60 roughly could be €50 off the loan and €10 for interest. You recent statement will tell you this

johnam

If you have been keeping you payments up to date then the 9k you owe will include any interest due, except for possibly whatever interest has accrued since your payment last week or month. Interest is accrued daily, so if you made a payment last week then the most you would have accrued would be 6 days, if your payment was last month, then you could owe a few weeks interest on top of the 9k. There are no penalties with the Credit Union for paying your loan early.

dobsdave

All credit unions have slighly different rules etc.

Call your branch and explain what you want to do.

ElKavo

L5 wrote: »

You can in general pay off as much as you like from savings provided you keep the ratio of 1 euro in savings to every 4 euro in Loan once the payment has been made.

Hi L5, or anyone else who may know the answer.

Do you know is this a part of rules for all Credit unions? I have 9.5k loan and 6.5k savings. The savings are not earning nearly as much as the loan is costing me. Is it possible to say reduce both amounts in keeping to the 4:1 ratio? I.E if I kept €1k in the savings and reduced the loan by the €5.5k bringing the loan €4k and keeping the loan to savings ratio to 4:1. Thereby reducing the interest bill, as it would then be on €4k as opposed to €9.5k

Thanks for your reply.

Truman Burbank

ElKavo wrote: »

Hi L5, or anyone else who may know the answer.

Do you know is this a part of rules for all Credit unions? I have 9.5k loan and 6.5k savings. The savings are not earning nearly as much as the loan is costing me. Is it possible to say reduce both amounts in keeping to the 4:1 ratio? I.E if I kept €1k in the savings and reduced the loan by the €5.5k bringing the loan €4k and keeping the loan to savings ratio to 4:1. Thereby reducing the interest bill, as it would then be on €4k as opposed to €9.5k

Thanks for your reply.

I have done the above several times with no issues. Any amount of overpayment on the loan could be paid back at any time per the T&Cs. In these cases (unlike banks) it was OK on a fixed rate (e.g. educational, all-purpose loans etc). Just phoned and asked what I needed to keep in shares if had X amount disposable to pay down loan capital. Then faxed/posted signed/dated request. HSSCU.

ElKavo

Truman Burbank wrote: »

I have done the above several times with no issues. Any amount of overpayment on the loan could be paid back at any time per the T&Cs. In these cases (unlike banks) it was OK on a fixed rate (e.g. educational, all-purpose loans etc). Just phoned and asked what I needed to keep in shares if had X amount disposable to pay down loan capital. Then faxed/posted signed/dated request. HSSCU.

Brilliant news. I have emailed my credit union and I await response.... with baited breath of course:)

Can you tell me is that part of the charter or are all credit unions tied to this rule?

ElKavo

Ok So I mailed the credit union and asked them the question.

Here is the mail to them,

"I am unsure If this is possible but perhaps you could shed some light on it
for me. Going on the presumption that the loan to share ratio is 4:1 would
it be possible to use shares to payoff loan. I give my example below.

I have 9.5k loan and 6.5k savings. The savings are not earning nearly as
much as the loan is costing me. Is it possible to say reduce both amounts
in keeping to the 4:1 ratio? I.E if I kept ?1k in the savings and reduced
the loan by the ?5.5k bringing the loan ?4k and keeping the loan to savings
ratio to 4:1. Thereby reducing the interest bill, as it would then be on
?4k as opposed to ?9.5k

This would help greatly in my monthly expenses and also speed up the time
to total loan repayment".

.

and their reply,

"I am emailing you in relation to your request detailed below.

I am unsure as to where you received the information on ratio's however we do not base transfers on this. Any request for share transfer must go to our board of directors. The next meeting is on the 15th of April and I will submit your request.

We will be in touch on the 16th of April with an answer."

So It seems that not all credit unions are the same or do not apply the same rules.

I wait in anticipation. If anyone knows if this is written in their charter or anywhere please let me know. I would love to have something other than idle chat to go back with, it would be great.

Cheers

P. Breathnach

ElKavo wrote: »

...
So It seems that not all credit unions are the same or do not apply the same rules...

I think your inference is correct. My CU applied a 3:1 ratio a few years back; I'm not sure if that has changed, but I think it has not.

Anyone

ElKavo wrote: »

Ok So I mailed the credit union and asked them the question.

Here is the mail to them,

"I am unsure If this is possible but perhaps you could shed some light on it
for me. Going on the presumption that the loan to share ratio is 4:1 would
it be possible to use shares to payoff loan. I give my example below.

I have 9.5k loan and 6.5k savings. The savings are not earning nearly as
much as the loan is costing me. Is it possible to say reduce both amounts
in keeping to the 4:1 ratio? I.E if I kept ?1k in the savings and reduced
the loan by the ?5.5k bringing the loan ?4k and keeping the loan to savings
ratio to 4:1. Thereby reducing the interest bill, as it would then be on
?4k as opposed to ?9.5k

This would help greatly in my monthly expenses and also speed up the time
to total loan repayment".

.

and their reply,

"I am emailing you in relation to your request detailed below.

I am unsure as to where you received the information on ratio's however we do not base transfers on this. Any request for share transfer must go to our board of directors. The next meeting is on the 15th of April and I will submit your request.

We will be in touch on the 16th of April with an answer."

So It seems that not all credit unions are the same or do not apply the same rules.

I wait in anticipation. If anyone knows if this is written in their charter or anywhere please let me know. I would love to have something other than idle chat to go back with, it would be great.

Cheers

Thats the rule though, all share to loan transfers where the loan is greater than the shares can only be approved by the Board of Directors. If the loan is equal to or less than the shares, then the board dont need to approve it.

Truman Burbank

http://www.askaboutmoney.com/showthread.php?t=170884

ElKavo

Truman Burbank wrote: »

http://www.askaboutmoney.com/showthread.php?t=170884

Thanks a mill Truman, that is the exact information I was looking for. Greatly appreciated.

ElKavo

Hello all, Just back from my Cu and have had the 5.5k transferred from shares to loan. Wippie. I guesstimate that it will save me approx 300€ for the remainder of the loan in interest alone. That is almost one months payment. Just want to say thanks to everyone who gave advice on the thread and a special thanks to Truman burbank... You tha man!!;)

Truman Burbank