Loan Arrears

rdub73

Hi

Looking for some legal/financial advice.

Id like to know where I stand in a very frustrating and unfair situation . . .

I took out a Credit Union Loan in 2008 for E12,000 . Unfortunately we hit a bump with the recession and fell into arrears on this loan but have maintained some form of payment throughout the years .Our local CU was taken over by Progressive CU ltd. a few years ago .

Having requested a breakdown of the loan and repayments since 2008 it turns out I have paid E15,076 with an outstanding balance of E5,397 in arrears/interest. They have got their outlay of 12k and 3k in interest and still I owe 5k which is just going into the ether. Whats my chances in court with this shower ?

nuac

Mod
Sorry, legal advice not available on this forum
CUs are financial cooperatives, owned by all the members, including yourself
If you think your statement is wrong you can ask for one of the CU supervisors to review it
( Apart from its Directors, each CU has a supervisory board who can investigate members' complaints

rdub73

Is there a forum I can get advice on ?

Thanks

nuac

Mod
Moving to Banking, Insurance & Pensions

emeldc

You would really need to tell us the % rate and the repayments you were making but €12,000 over 10 yrs @ 11% would leave you with a repayment of €165 pm and a total interest bill just short of €8k. You've paid €3k in interest. By the way I'm not a financial head so I could be way out here.

source

rdub73 wrote: »

Hi

Looking for some legal/financial advice.

Id like to know where I stand in a very frustrating and unfair situation . . .

I took out a Credit Union Loan in 2008 for E12,000 . Unfortunately we hit a bump with the recession and fell into arrears on this loan but have maintained some form of payment throughout the years .Our local CU was taken over by Progressive CU ltd. a few years ago .

Having requested a breakdown of the loan and repayments since 2008 it turns out I have paid E15,076 with an outstanding balance of E5,397 in arrears/interest. They have got their outlay of 12k and 3k in interest and still I owe 5k which is just going into the ether. Whats my chances in court with this shower ?

Right, so you took out a loan in 2008, going off the usual maximum credit union term of 5 years and average interest rate of c. 8% the €15,000 would be right, if you met your payments on time every month.

You note that it was not possible to meet full payments as you had financial difficulties during the recession, you don’t say how long you were making reduced payments for, or whether the payments were below, above or in line with the interest amount. When you make reduced payments the interest will always be paid first and the principal will then be paid from what is left of the payment you made.

Pulling figures out of my @rse to explain here but, If your monthly payment was €350 and your interest payment was €160, and you were paying let’s say €180 a month, then only €20 would be coming off the capital rather than the €190 that would have come off the capital if you had been paying the full amount. (the figures don’t really work here but it’s just an example)

If the payments you were making were below the interest payment figure, then the capital would have increased with each underpayment. So in the above example if you were paying €100 a month, the principal would be increasing by €60 a month, or the portion of the interest you didn’t pay.

So if you underpay then the principal either stays stagnant (interest only payments), decreases at a much slower rate than normal (interest and part principal) or increases (below interest payment).

While you may feel it’s unfair, it’s just how a loan operates depending on how you make your payments. This also does not include the possibility that interest was accruing on the arrears, though you would need to refer to your original credit agreement to confirm if that was the case. If it was, then the principal would increase at a faster rate than if you were just paying below the interest amount.

Basically the longer you are paying the loan, the more interest you will pay.

rdub73

emeldc wrote:

You would really need to tell us the % rate and the repayments you were making but €12,000 over 10 yrs @ 11% would leave you with a repayment of €165 pm and a total interest bill just short of €8k. You've paid €3k in interest. By the way I'm not a financial head so I could be way out here.

11.9% . This loan was initially over 5yrs . Yes we fell behind but it's sickens me that I'm now just paying interest after they have gotten their Money and 3k interest. I'm well aware this is how the system works but it's taking the Mick at this point

The J Stands for Jay

Taking very rough calculations and lazy rules of thumb, this would look to be correct for an interest rate of 9.75%. That's a very rough figure, but that seems like a reasonable rate for a personal loan.

I'm too lazy to do it properly on a spreadsheet, but it all looks reasonable from what I can see.

The J Stands for Jay

rdub73 wrote: »

11.9% . This loan was initially over 5yrs . Yes we fell behind but it's sickens me that I'm now just paying interest after they have gotten their Money and 3k interest. I'm well aware this is how the system works but it's taking the Mick at this point

The problem is, they haven't got their money. What you've paid them so far is partly interest and partly repayment. In the earlier years, it's mainly interested, but that reduces as you start to clear off the interest. You've had their money for longer than initially agreed, and they don't get it for free so they can't let you have it for free.

rdub73

source wrote:

While you may feel it’s unfair, it’s just how a loan operates depending on how you make your payments. This also does not include the possibility that interest was accruing on the arrears, though you would need to refer to your original credit agreement to confirm if that was the case. If it was, then the principal would increase at a faster rate than if you were just paying below the interest amount.

Yeah as much as it pains me to accept this it is still hard to swallow . I just wondered do they cut a deal after so long ?

emeldc

rdub73 wrote: »

11.9% . This loan was initially over 5yrs . Yes we fell behind but it's sickens me that I'm now just paying interest after they have gotten their Money and 3k interest. I'm well aware this is how the system works but it's taking the Mick at this point

It isn't really. They allowed you to pay over 10yrs instead of 5. Now you owe them the interest on the other 5. Try and strike a new deal for €5500 over 3 years @10%(you might even get lower) and your repayments will be €180 pm approx. You can do the maths here:

https://www.ccpc.ie/consumers/tools-and-calculators/loan-calculator/

source

rdub73 wrote: »

Yeah as much as it pains me to accept this it is still hard to swallow . I just wondered do they cut a deal after so long ?

Credit unions tend not to do write offs because the money they lend comes from the funds other members have on deposit.

rdub73

emeldc wrote:

It isn't really. They allowed you to pay over 10yrs instead of 5. Now you owe them the interest on the other 5. Try and strike a new deal for €5500 over 3 years @10%(you might even get lower) and your repayments will be €180 pm approx. You can do the maths here:

Yeah that seems like a way to go forward
Cheers

Bubbaclaus

rdub73 wrote: »

Whats my chances in court with this shower ?

Would love to see this in court.

"Ive brought the CU to court because they are asking me to pay back the loan I took out"