Credit Union loan repayment

AlwaysRaining

Hi,

Can anyone explain to me how the 'Advance' sum works during loan payment at a Credit Union? (Or is this varied CU to CU as well?)

So, I've been making weekly payments, every week I pay in slightly more than is required per week against the loan. This bumps up the 'advance' amount.

I was always of the impression that the advance payment works in a way that if you've built it up, you can miss a weekly payment (it's not direct debit) as they'll take it out of the 'advance' sum. However, when I go to the do my weekly payment again (after missing a week as there was plenty in advance to cover off the previous week), the loan opening balance hasn't changed even though some money has been discounted from the advance sum.

Cheers,
AR

Spocker

What does your loan documentation say about over/advance payments?

nailer54321

From what I can figure out the advance payment is the amount you are ahead of what you said you would pay back. So if you agree a 100pw repayment and you pay 120pw then each week you would be paying an extra 20 which would accumulate in your advance payment.

danwhite88

In the credit union you can pay the loan of quicker than the dates that was on the documents you signed when taking out the loan. So if your loan was to be paid back over 52 weeks and you overpaid weekly your term of loan would reduce.

I think when your in advance and miss a couple weeks they only take interest from the advance fee and doesn't come off the the loan.

AlwaysRaining

That's the thing.. it doesn't say anythng about it other than no penalties in either case of early payments or when account goes to arrears.
I have talked to them in the local CU as well but didn't really get or understand the answer .. was just told that the advance sum is not really money... hence posted here...
I've been going through numbers now though and I think what this is, is like- because I've been overpaying weekly, it's telling me on the receipts that I'm ahead of payment schedule as such... hence no changes in the Opening/Closing balances.

AlwaysRaining

Aye, that makes sense danwhite88.. was totally bamboozled for a while though, but it helped going through the numbers for sure. Thanks to all for replying!