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Credit Union - 1%per day Please Help

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  • 06-12-2010 1:49pm
    #1
    Soldier
    Registered Users Posts: 83 ✭✭


    Hi Guys

    i really need your help to try to understand this mess.

    i am writing this for one of my friends. I have a loan with the credit union. i was paying 380 a month but i lost my job so now i got them to drop the paymets to 200 a month or 50 a week.
    i was paying off 200 and most of it was going on interest like 180 interest and only 20 coming off the loan so this happened for a few weeks so i rang them and the guy said that they charge 1% interest per day on the overall balance i thought you just get charged per month like a credit card!!!! i was paying it on the 19th of each month and was never told this. so i decided to pay it weekly. i paid 70 of the loan on the 4th of the month and 59 euro went on interest and only 11 came off the loan. i seriously at my wits end. all my money going on interest the loan isnt coming down at all. Are they right in the way they are charging me? Please help. at this rate id be better off with a credit card


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


    Soldier wrote: »
    Hi Guys

    i really need your help to try to understand this mess.

    i am writing this for one of my friends. I have a loan with the credit union. i was paying 380 a month but i lost my job so now i got them to drop the paymets to 200 a month or 50 a week.
    i was paying off 200 and most of it was going on interest like 180 interest and only 20 coming off the loan so this happened for a few weeks so i rang them and the guy said that they charge 1% interest per day on the overall balance i thought you just get charged per month like a credit card!!!! i was paying it on the 19th of each month and was never told this. so i decided to pay it weekly. i paid 70 of the loan on the 4th of the month and 59 euro went on interest and only 11 came off the loan. i seriously at my wits end. all my money going on interest the loan isnt coming down at all. Are they right in the way they are charging me? Please help. at this rate id be better off with a credit card

    No 1% of balance each day is not right. The APR is rate you need. They calculate it daily and apply it on a monthly basis, well thats what everyone else does.

    What balance is it.


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    #3
    dobsdave
    Closed Accounts Posts: 1,814 ✭✭✭dobsdave


    Soldier wrote: »
    Hi Guys

    i really need your help to try to understand this mess.

    i am writing this for one of my friends. I have a loan with the credit union. i was paying 380 a month but i lost my job so now i got them to drop the paymets to 200 a month or 50 a week.
    i was paying off 200 and most of it was going on interest like 180 interest and only 20 coming off the loan so this happened for a few weeks so i rang them and the guy said that they charge 1% interest per day on the overall balance i thought you just get charged per month like a credit card!!!! i was paying it on the 19th of each month and was never told this. so i decided to pay it weekly. i paid 70 of the loan on the 4th of the month and 59 euro went on interest and only 11 came off the loan. i seriously at my wits end. all my money going on interest the loan isnt coming down at all. Are they right in the way they are charging me? Please help. at this rate id be better off with a credit card


    Depending on balance and term, maybe its 1% per month?


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    #4
    Soldier
    Registered Users Posts: 83 ✭✭Soldier


    Hi Guys

    i got him to ring the credit union there. its 1% a month your right. he asked about apr and they said its 12.68%!!! sorry this confuses us she tried explaining but they werent very good.

    he paid 200 on the 19/11 120.28 went on interest so only 79came off the loan so decided to see if he paid it a bit early so paid 70 on 4/12 and 57.90 on interest and 12.10 came off the loan. i dont think it matters now what time he pays it it all seems to be going on interest. he still have 11000 left to pay :'( feel like crying. would i be better to transfer this to a interest free credit card. i'd get a lower rate.


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    #5
    Anyone
    Registered Users Posts: 3,376 ✭✭✭Anyone


    The maximum by law that a CU can charge is 1% per month, or 12.68% APR.

    The interest on 11k at that rate is around 25euro per week, and as has been said interest is charged daily(this is actually to the benefit of the borrower, as interest is charged on a reducing balance).

    As for transferring it to a Credit Card, I don't think any CC company will lend 11k to someone who is unemployed. Also, even if you could, I'd imagine the interest will be alot higher than 12.68% once the interest free term is up.

    My advice is to go to the Credit Union and see what can be arranged. The repayments of 200 per month are already in place, but this may be a temporary measure. See if some of the shares can be transferred off the loan and ask to have the loan extended to the longest period avail.

    Remember, once you are back in employment and able to repay a higher amount you can, at no penalty to you, but at least this way you will know your agreed repayments while you are unemployed. This will clear the loan faster and the amount if interest paid over the term will be less.


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    #6
    bills
    Registered Users Posts: 952 ✭✭✭bills


    Theres not really much that can be done only continue to pay as much as you can off the loan. I know its easier said than done if not working.
    The quicker you pay the loan, the less interest.
    Always check APR before getting a loan.


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    #7
    Jet Black
    Registered Users Posts: 3,845 ✭✭✭Jet Black


    Don't look at it that way, the interest has to be paid. They only way its going to be reduced if he pays a lump sum off it.

    No credit card company would touch that. Its hard enough to get a credit card but looking for 11500 limit, giving it to someone whos unemployed and asking them to take a transfer of a loan is impossible. And whats going to happen after the six months? The interest will increase to over 16% and they are less forgiving than the CU.


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    #8
    romah
    Closed Accounts Posts: 150 ✭✭romah


    Soldier..the 1% a month is the way that your credit union will calculate the interest ...

    Remember that when you make a loan payment to a credit union the first amount that is taken from you is the interest portion .

    if this makes sense to you ....you said Loan balance is €11000 ..this means that interest payment will be around €110 per month which is €3.70 per day
    The last time you paid on 4 Dec there was 15 days interest due. 15 x 3.70 = €55.50 ..which is close to the €57.90 that you said..
    If you work it out on a yearly basis you will pay 365 days interest which is €1350 per annum and this works out at around 12% ..
    The 12% rate is average for personal loans these days even in banks.. look up
    http://www.itsyourmoney.ie/costcomparisons/cs_group_personal_loans.htm

    for comparisons

    YOu also said that the repayments had been reduced ..they would still be paying the same level of interest but more of the payment would be off the loan .


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