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Credit Union Loans

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  • 13-08-2013 3:29pm
    #1
    Ms.Sunshine
    Registered Users Posts: 441 ✭✭


    How exactly does a credit union loan work? Is it really as simple as they say ? For example I read about a travel loan they had over a month ago and it was 1000 euro but obviously they would add on there own amount of interest & you would pay back an amount each week? I don't have an account with the credit union at the moment but am wondering if they are worth it?

    This is the loan I was talking about.

    Amount Borrowed: €1,000

    Repayment Period: 1 year

    Weekly Repayment: €20.19

    Interest Amount: €48.97

    Total Repayement: €1,048.97

    Loan Rate: 9.5% (9.9% apr)


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    #2
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    Ms.Sunshine wrote: »
    How exactly does a credit union loan work? Is it really as simple as they say ?

    Your example sounds about right.

    You'll need to be a member for a while before you can borrow, typically most Credit Unions expect to see 12 weeks / 3 months regular savings before you can borrow.

    Also you have to build a history with them so there will be a limit on the size of the first loan.

    In addition most Credit Unions automatically provide free insurance on Loans and Savings as well as Death Benefit Insurance.

    For example, if you opened an account an saved €400 and then borrowed €1000 for your holiday. If you then died on the way to the airport the following would happen:
    - Loan insurance would clear loans balance;
    - Share insurance would pay an extra €400 into your account
    - Death Benefit insurance would pay €1950 into your account
    The above would then be available to your next of kin. Different Credit Unions have different rules so you would need to check with your local CU.

    Also, if you got a bonus from work and cleared off the loan after 6 months, the interest amount would be only about €25


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    #3
    2012paddy2012
    Registered Users Posts: 2,880 ✭✭✭2012paddy2012


    Ms.Sunshine wrote: »
    How exactly does a credit union loan work? Is it really as simple as they say ? For example I read about a travel loan they had over a month ago and it was 1000 euro but obviously they would add on there own amount of interest & you would pay back an amount each week? I don't have an account with the credit union at the moment but am wondering if they are worth it?

    This is the loan I was talking about.

    Amount Borrowed: €1,000

    Repayment Period: 1 year

    Weekly Repayment: €20.19

    Interest Amount: €48.97

    Total Repayement: €1,048.97

    Loan Rate: 9.5% (9.9% apr)


    My friend had an account for a good while at credit union she got a loan of 400 euro she has shared of 600 ... She has had a few loans before all paid back in proper time no problem ... She looked for a withdrawal of 250 other day ( her wages paid in weekly to cr union) she was refused as it would bring her shares below the value of her outstanding loan !!
    That is very strange .. She is a member a long time .... I don't fancy your chances if other credit unions carry on like this !!


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    #4
    Darren 83
    Registered Users Posts: 1,685 ✭✭✭Darren 83


    2012paddy2012 wrote: »
    My friend had an account for a good while at credit union she got a loan of 400 euro she has shared of 600 ... She has had a few loans before all paid back in proper time no problem ... She looked for a withdrawal of 250 other day ( her wages paid in weekly to cr union) she was refused as it would bring her shares below the value of her outstanding loan !!
    That is very strange .. She is a member a long time .... I don't fancy your chances if other credit unions carry on like this !!

    Her shares are secured against her loan so she won't be able to take any of her shares out.


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    #5
    another question
    Closed Accounts Posts: 1,386 ✭✭✭another question


    2012paddy2012 wrote: »
    My friend had an account for a good while at credit union she got a loan of 400 euro she has shared of 600 ... She has had a few loans before all paid back in proper time no problem ... She looked for a withdrawal of 250 other day ( her wages paid in weekly to cr union) she was refused as it would bring her shares below the value of her outstanding loan !!
    That is very strange .. She is a member a long time .... I don't fancy your chances if other credit unions carry on like this !!

    What are you talking about? Of course she can't withdraw her savings if they go below the value of her loan. She is availing of a special interest rate for a 'secure loan' she opted for that. A secure loan is that her savings secure the loan. They would have explained this to her when she took out the loan and it would also be written in her loan agreement. The Credit Union is a fantastic place for everyone especially those on low incomes and she wants it every-way, a loan and withdraw her savings, she can't expect to avail of a separate set of rules from everybody else just because she is a member for a long time.


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    #6
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    2012paddy2012 wrote: »
    My friend had an account for a good while at credit union she got a loan of 400 euro she has shared of 600 ... She has had a few loans before all paid back in proper time no problem ... She looked for a withdrawal of 250 other day ( her wages paid in weekly to cr union) she was refused as it would bring her shares below the value of her outstanding loan !!
    That is very strange .. She is a member a long time .... I don't fancy your chances if other credit unions carry on like this !!

    Paddy, A couple of things at play here.

    Firstly at the time a loan is issued in a credit union it is explained that shares are held as security against the loan. The restriction of withdrawal of shares is set out in Section 32 of the Credit Union Act 1997.

    If she has a loan of 400 and shares of 600, she as net savings of €200. If her wages are paid in directly then she should have available to her, her wages plus €200, so there is something missing in your scenario.

    On the assumption that the €400 loan was a top up of an existing loan of say €1,500, your friend may now have a loan of €1,900 and Shares of €600, therefore she would not be eligible to withdraw shares as previously outlined. However, I would find it very strange that if her wages are being paid directly in that she is not allowed a withdrawal - this would mean that your friend could not buy food, let alone pay other bills.

    For situations such as above most credit unions operate a separate stamp account (or similar) to facilitate the lodgement and withdrawal of wages.

    I don't think you have the full picture of what is happening but I hope the above will help.


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    #7
    wmpdd3
    Registered Users Posts: 9,624 ✭✭✭wmpdd3


    Sounds like a mistake, she should have a shares account and a current type account, her wages should go into the current account not the shares account.


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    #8
    another question
    Closed Accounts Posts: 1,386 ✭✭✭another question


    wmpdd3 wrote: »
    Sounds like a mistake, she should have a shares account and a current type account, her wages should go into the current account not the shares account.

    Out of interest, do all CU's offer a current type account?


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    #9
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    another question wrote: »
    Out of interest, do all CU's offer a current type account?

    Unfortunately not, however from 01 Oct 2013 the new CU Act is commencing. This will allow CU's more flexibility with regard to 'Attached' shares and also new services.


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    #10
    2012paddy2012
    Registered Users Posts: 2,880 ✭✭✭2012paddy2012


    badgerbroc11 wrote: »
    Paddy, A couple of things at play here.

    Firstly at the time a loan is issued in a credit union it is explained that shares are held as security against the loan. The restriction of withdrawal of shares is set out in Section 32 of the Credit Union Act 1997.

    If she has a loan of 400 and shares of 600, she as net savings of €200. If her wages are paid in directly then she should have available to her, her wages plus €200, so there is something missing in your scenario.

    On the assumption that the €400 loan was a top up of an existing loan of say €1,500, your friend may now have a loan of €1,900 and Shares of €600, therefore she would not be eligible to withdraw shares as previously outlined. However, I would find it very strange that if her wages are being paid directly in that she is not allowed a withdrawal - this would mean that your friend could not buy food, let alone pay other bills.

    For situations such as above most credit unions operate a separate stamp account (or similar) to facilitate the lodgement and withdrawal of wages.

    I don't think you have the full picture of what is happening but I hope the above will help.

    Sound that explains it .. She just had shares of around 600. A loan of 400... What happened was she looked for money the day before her wages were due in and they wouldn't give her the money till it was in the following day .. As the shares would reduce below the loan as the reason obviously ... Thks for your informative interestingly reply. Paddy


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    #11
    2012paddy2012
    Registered Users Posts: 2,880 ✭✭✭2012paddy2012


    another question wrote: »
    Out of interest, do all CU's offer a current type account?

    This credit union doesn't have a current account .. Wages goes in and out of the share account.. She takes her money out each fri ... Very handy .. Absolutely no charges


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    #12
    2012paddy2012
    Registered Users Posts: 2,880 ✭✭✭2012paddy2012


    another question wrote: »
    What are you talking about? Of course she can't withdraw her savings if they go below the value of her loan. She is availing of a special interest rate for a 'secure loan' she opted for that. A secure loan is that her savings secure the loan. They would have explained this to her when she took out the loan and it would also be written in her loan agreement. The Credit Union is a fantastic place for everyone especially those on low incomes and she wants it every-way, a loan and withdraw her savings, she can't expect to avail of a separate set of rules from everybody else just because she is a member for a long time.

    I don't believe she wants a set of rules from everyone else !!!!! Bit over the top😀


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    #13
    wmpdd3
    Registered Users Posts: 9,624 ✭✭✭wmpdd3


    I that makes sense. I went in one day as I had list my bank cards and needed cash, I wanted the 26 difference between my loan and shares, I was brought into an office and interviewed about the with drawl.

    They gave it to me in the end but I realised it is not that easy to with draw shares when you have a loan.

    My cu had a current account and internet banking and a card is to follow, when it does I will leave my back.


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