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Credit union loan advice.

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  • 19-08-2010 11:52am
    #1
    Bassboxxx
    Registered Users Posts: 608 ✭✭✭


    Hi,
    Is there any reason why I shouldn't pay off my CU loan with my CU savings?

    I have 4k outstanding on my loan and have a couple of k more then that in savings.
    I put money in to both regularly and am ahead in repayments.
    The interest in around 10euro a week.


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    #2
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Bassboxxx wrote: »
    Hi,
    Is there any reason why I shouldn't pay off my CU loan with my CU savings?

    I have 4k outstanding on my loan and have a couple of k more then that in savings.
    I put money in to both regularly and am ahead in repayments.
    The interest in around 10euro a week.

    I would clear the CU loan immediately. Higher interest rate being charged then on your savings thus its a no brainer.


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    #3
    Bassboxxx
    Registered Users Posts: 608 ✭✭✭Bassboxxx


    chris85 wrote: »
    I would clear the CU loan immediately. Higher interest rate being charged then on your savings thus its a no brainer.

    Thanks Chris, I figured as much just wanted to be sure. I asked them, but as you would expect they gave me some vague reason why I shouldn't.

    On that tomorrow, a tenner a week is nothing to be sniffed at.


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    #4
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Bassboxxx wrote: »
    Thanks Chris, I figured as much just wanted to be sure. I asked them, but as you would expect they gave me some vague reason why I shouldn't.

    On that tomorrow, a tenner a week is nothing to be sniffed at.

    For me a tenner a week is my self and the other halfs phone bills for the month covered. As they say every little helps.

    Keep saving with them though as having a CU is great these days as seem to be the only ones lending.


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    #5
    Curry chip
    Closed Accounts Posts: 37 ✭Curry chip


    My mother used to volunteer for one of the CU committis. She said it's better to pay the loans off in installments.
    It's shows that you are consistant with re-payments and looks good for when you go for your next loan.
    It's up to you though!


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    #6
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Continue to save with them and they will serve you to show your ability to repay as will show your disposable income you can use for financial commitments.

    My CU has always said beneficial to pay earlier. Its in the best interests of the customer.


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    #7
    Cookie Jar
    Closed Accounts Posts: 1,264 ✭✭✭Cookie Jar


    Curry chip wrote: »
    My mother used to volunteer for one of the CU committis. She said it's better to pay the loans off in installments.
    It's shows that you are consistant with re-payments and looks good for when you go for your next loan.
    It's up to you though!


    +1 on this


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    #8
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    Purely from an interest rate viewpoint it makes no sence at all.

    As for consistancy.... what a load of horse crap. Of course some CU's would come out with boll0x like that as it's not profitable to have a loan paid off early. Let me tell you something, repayment capacity is the first thing that will determine if you can apply for a loan. The other variable (i.e track record) really only comes into play in circumstances where repayment capacity is tight or there is a doubt about other factors such as duration of employment etc.


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    #9
    Anyone
    Registered Users Posts: 3,376 ✭✭✭Anyone


    Depending on your age, you may lose insurance on your savings, that you wont be able to get back. If you are under 55, this is irrelevant though.

    Part of the ethos of the CU is to encourage the member to maintain and build their savings. Its a good principle to have, and in my experience people are more likely to repay a loan, than save. So the money you use to repay the loan, may not be re-saved.
    stepbar wrote: »

    As for consistancy.... what a load of horse crap. Of course some CU's would come out with boll0x like that as it's not profitable to have a loan paid off early. Let me tell you something, repayment capacity is the first thing that will determine if you can apply for a loan. The other variable (i.e track record) really only comes into play in circumstances where repayment capacity is tight or there is a doubt about other factors such as duration of employment etc.

    That is not always the case.While ability to repay is the main factor, if he/she drains his savings, and the CU in question lends on a multiple of shares basis, they may not be able to borrow again until the savings are rebuilt.

    In my opinion, if money is tight, transfer your shares, if they are not, continue to repay the loan as you are. At least that way, you will have that 4k in your savings if things do become tight in the future.


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    #10
    chris85
    Registered Users Posts: 4,502 ✭✭✭chris85


    Anyone wrote: »
    Depending on your age, you may lose insurance on your savings, that you wont be able to get back. If you are under 55, this is irrelevant though.

    Part of the ethos of the CU is to encourage the member to maintain and build their savings. Its a good principle to have, and in my experience people are more likely to repay a loan, than save. So the money you use to repay the loan, may not be re-saved.



    That is not always the case.While ability to repay is the main factor, if he/she drains his savings, and the CU in question lends on a multiple of shares basis, they may not be able to borrow again until the savings are rebuilt.

    In my opinion, if money is tight, transfer your shares, if they are not, continue to repay the loan as you are. At least that way, you will have that 4k in your savings if things do become tight in the future.

    No.

    The OP appers to be ok paying the loan otherwise it wouldnt be a question as if he was skint he would just clear it with his shares. The best advice is the clear the loan with the shares and ideally continue to save what the you are paying the loan off with.

    The CU arent thinking about the members bottom line here they may be thinking he may stop saving once loan is cleared which frankly is his choice if he wants but cost wise its better the OP clears his loan.


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    #11
    tawfeeredux
    Registered Users Posts: 795 ✭✭✭tawfeeredux


    Apologies for slightly hi-jacking this thread, but I'm thinking of applying for a CU loan & was looking for some advice.

    How important is the level of savings that you have with the CU? My balance is down to a couple of hundred quid having had to make a withdrawal lately, but I've had a small standing order going into the account each week. I hope to loan about 3-4K in order to pay off a credit card. Is the ability to repay more important than level of savings?


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    #12
    deelite
    Registered Users Posts: 2,876 ✭✭✭deelite


    tawfeeredux wrote: »
    Apologies for slightly hi-jacking this thread, but I'm thinking of applying for a CU loan & was looking for some advice.

    How important is the level of savings that you have with the CU? My balance is down to a couple of hundred quid having had to make a withdrawal lately, but I've had a small standing order going into the account each week. I hope to loan about 3-4K in order to pay off a credit card. Is the ability to repay more important than level of savings?


    You have to be a regular saver with them for 13 weeks. You are allowed to borrow twice the amount you have saved for your first loan. When you pay back this back you will be allowed to borrow 3 times your savings. It may vary from CU to CU but that's the general idea.


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    #13
    stepbar
    Closed Accounts Posts: 6,123 ✭✭✭stepbar


    deelite wrote: »
    You have to be a regular saver with them for 13 weeks. You are allowed to borrow twice the amount you have saved for your first loan. When you pay back this back you will be allowed to borrow 3 times your savings. It may vary from CU to CU but that's the general idea.

    Just to confirm that it varies from CU to CU, I did none of the above.

    I walked in one Saturday evening, said I wanted 12k to pay off an existing loan (which was riding me in BIK tax). No saving, hadn't used my account in years and first loan. Asked to stick a grand in and the cheque was ready the following week. I could have told them anything.

    Mind you it helps to know people ;)


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    #14
    eimearcmh
    Closed Accounts Posts: 599 ✭✭✭eimearcmh


    Bassboxxx wrote: »
    Hi,
    Is there any reason why I shouldn't pay off my CU loan with my CU savings?

    I have 4k outstanding on my loan and have a couple of k more then that in savings.
    I put money in to both regularly and am ahead in repayments.
    The interest in around 10euro a week.

    Pro's-You will have your loan paid. There will be no penalties for doing this. You will save yourself some money as you wont be paying interest on the remaining €4,000.

    Con's-Think of how long it took you to save that €4,000. That will no longer be part of your savings.

    What rate are your paying? Also ask them to tell you what you will save in interest if you pay the loan off early.


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    #15
    pampers1
    Registered Users Posts: 404 ✭✭pampers1


    i have a CU loan and want to reduce the repayments. They say that they will agree the reduction in repayments but won't put them on the system, so my loan will keep going into arrears. My guarantor on the loan has savings and their savings will be locked in because of it. Is this normal practice does anyone know. I think its so weird that they'll agree the reduction in repayments but they're not actually agreeing to it if they're letting me go into arrears each month.


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