Appealing Credit Union Loan Decision

lucalux · 06-03-2025 02:48PM #1

Hi all, just wondering if I could get any advice for the situation I find myself in from people who know more than I!

I'll try to add as much info here as I can to begin with so sorry if it's long.

I've joined a credit union, 2 months ago. I've built up some savings (25% of loan amount applied for) and applied for a loan to buy a car.

All of the savings is being offered as security. I've been saving via a DD of a set amount, (more than what I've said I'd like my repayment amount to be) and topping up with as much as I can on top of that.

Got a decision this week to say the committee or board would rather I continue saving for another 'few months' before the loan would be considered.

I have a bad credit rating from a good few years ago. The loans officer flagged the amount of missed repayments to me when explaining the decision. I completely get that ofc.

All outstanding debt was repaid in full. No current loans or credit outstanding.

My question is, would there be any sense in appealing to the committee in a letter, explaining the reasons for the bad credit and emphasising my ability and willingness to repay this loan as quickly as possible with no lapses?

I understand they have rules and regs, the repayment amounts I've proposed are manageable for me and within ratios.

I was told to wait 8 weeks before contacting them again about this. I don't know if I'd annoy them by adding more context and a personal appeal?

I'm just really stuck right now, and not sure if there's anything else I could be doing.

(i've asked about the CU It Makes Sense Loan, which is aimed at people on social welfare, and the loans officer said they don't do it because of the 'very high interest rate' which, as far as I had seen, was 12%.

That has a max loan amount of €2000 and that tbh would be enough as right now I don't have any means of transport and won't have for the foreseeable 2-3 months)

Any pointers or experience in this area would be hugely appreciated, thanks

coylemj · 06-03-2025 04:11PM

All CUs are different, they have their own rules and their own directors and/or loan approval committees. So it's impossible for anyone here to give you a definitive answer. I'm not suggesting that you name the CU, that would be a bad idea since you have give us so much information about your situation.

You didn't get an outright rejection, they just told you to keep saving and to come back again in a few months. I'd look on the positive side of that and not push my luck by initiating any kind of an appeal process, even if such a path exists with your CU.

You joined just two months ago and are now applying to take out a loan for four times the amount of your savings. Even with a squeaky clean credit record, I think that would be a challenge with most CUs.

Nigzcurran · 06-03-2025 04:15PM

Stick with the saving and you'll be good to go in 8 weeks I'm sure. And you'll start to build up a decent credit record again

Penn · 06-03-2025 04:20PM

Yeah I'm not sure any letter or discussion "emphasising my ability and willingness to repay this loan as quickly as possible with no lapses" would help, considering that's the whole crux of the loan application. The CU have to do their due diligence and determine things purely on a factual basis, and unfortunately you're going into the application with a history of missed repayments on previous loans, and you've only been a member of the CU for two months.

While your reasons for missing previous payments and your general circumstances may be completely different, the CU still have to take it into consideration, and as coylemj said, they haven't rejected your application, they just need more evidence to ensure the risk of you not repaying is minimised.

phormium · 06-03-2025 04:45PM

The Lending Committee may only meet monthly or even bi monthly which might account for them telling you give it 8 weeks! It's not as though a decision will be overturned by anyone else if it's gone to Committee.

I think do your letter but submit it at the 8 week stage so they have it in front of them at next meeting.

lucalux · 06-03-2025 09:21PM

Thanks all for those helpful views, I just didn't know if there was anything else I could have done.

I'll continue saving. I'll write a letter explaining, in broad terms, the reasons behind the lapse in repayments when I contact them again in 7 weeks or so.

Although I wonder if the It Makes Sense loan not being offered is something that creates a situation it was designed to avoid.

I've an emergency situation, no ability to access credit elsewhere. Exactly the scenario someone would turn to a moneylender.

Ar aon nós, that's the way it is. I'll just have to suck it up I know.

Cheers all

coylemj · 07-03-2025 04:51PM

I'll continue saving. I'll write a letter explaining, in broad terms, the reasons behind the lapse in repayments when I contact them again in 7 weeks or so.

I wouldn't do that. The committee know about the missed repayments and they also know that you paid off the loan in full. So I would let that rest and move on. The reason they rejected the loan is more because you've only been a member for two months and you're applying for a loan of four times the amount you have on deposit. Let the clock run for 2-3 months, keep saving and apply again. Do not resurrect your credit history.

Big Bag of Chips · 07-03-2025 05:08PM

Our local credit union used to have a rule that you could borrow double your savings for the first loan and then once that was cleared you could apply for a larger loan. I'm not sure if that still the case.

Before you send in your next application it might be worth making an appointment to meet with the loan officer and ask them what should you realistically apply for.

lucalux · 07-03-2025 07:05PM

https://www.boards.ie/discussion/comment/123241636#Comment_123241636

OK I can see that it might be counterproductive, I'll leave off the letter so. Thanks

lucalux · 07-03-2025 07:16PM

@big bag of chips

Thanks, I spoke to the loans officer twice and asked their opinion on how to approach things, and said I'd be happy with a loan of between X and Y amount and that if X was too much, Y was manageable.

I said I'd offer all of the savings as collateral, they said oh you don't need to put the whole amount down, why not just put down this amount? I had to stress I wanted to leave it all as security for the application

I asked what was the ratio of savings to loan amount that would be acceptable for the committee for someone in my position and was told 20% should be grand as its a relatively small loan. I've over 25% now

By next week I'll have 35% of the loan amount saved.

So I've asked as many questions and offered as many variables as I could think of when speaking with them and asked what my options were

Not sure if I can ask anything else here?

I thought the personal letter might help in the sense of the CU being more personal than a bank, but I know it's a financial institution and has its rules to follow so probably only annoying them to get something like that