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Taking a break from credit union loan repayments

  • 14-11-2015 12:19pm
    #1
    Diamond Doll
    Closed Accounts Posts: 1,344 ✭✭✭


    I have a credit union car loan that's probably about half paid off, I never missed a repayment to date, I got it almost a year ago. I pay by monthly direct debits. However due to personal circumstances, it's going to be very difficult for me to afford the repayments for the next 2-3 months. I pay €200 a month, so it's not an insubstantial amount.

    Is it worth asking them to allow me to miss the repayments, then resume in a couple of months? I probably wouldn't even ask if it was a bank loan ... however I've heard the credit unions can be more flexible this way.

    My main concern would that it would leave a black mark on my record for the future, and might affect my chances of ever getting another loan?


Comments

  • #2
    Aint Eazy Being Cheezy
    Registered Users, Registered Users 2 Posts: 4,631 ✭✭✭Aint Eazy Being Cheezy


    I'm not sure about getting it stopped, but I paid the interest only each week on mine a few years back, until I got back on my feet. They had no problem with that, and it didn't affect me getting another loan off them.


  • #3
    coylemj
    Registered Users, Registered Users 2 Posts: 25,476 ✭✭✭✭coylemj


    Diamond Doll wrote: »
    My main concern would that it would leave a black mark on my record for the future, and might affect my chances of ever getting another loan?

    That will only happen if you deviate from the agreed repayment schedule e.g. by missing repayments without prior approval. If you ask for and get approval for a break in repayments and stick to the agreement i.e. resume payments at the end of the holiday, it will have no effect on your credit rating.


  • #4
    ComfortKid
    Banned (with Prison Access) Posts: 2,169 ✭✭✭ComfortKid


    I only did this the other day, but I still have to pay the intrest every week, which in your case will be about 20 per month


  • #5
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    It will leave a black Mark on your credit history because your loan will go into arrears. If the CU is the only place you borrow from then that's not an issue, but if you intend on taking out a bank loan it will stop you.

    You should ask for a top up loan, explain to them what you need the money for, (this time of the year CUs are busy giving out small Christmas loans) and keep up with your repayments.

    You should also look at increasing the amount you repay to 220 (leave the Credit agreement amount at 200), this way you will be in advance on your loan which would allow you to reduce payments in the future


  • #6
    Spocker
    Moderators Posts: 6,864 ✭✭✭Spocker


    badgerbroc11 wrote: »
    It will leave a black Mark on your credit history because your loan will go into arrears. If the CU is the only place you borrow from then that's not an issue, but if you intend on taking out a bank loan it will stop you.

    You should ask for a top up loan, explain to them what you need the money for, (this time of the year CUs are busy giving out small Christmas loans) and keep up with your repayments.

    You should also look at increasing the amount you repay to 220 (leave the Credit agreement amount at 200), this way you will be in advance on your loan which would allow you to reduce payments in the future

    Why would they ask for a top-up loan if the whole point of the OPs request is to stop paying the full amount for a couple of months? If they can come to an agreement with the CU regarding rescheduling the payments, then the loan doesn't go into arrears, and there won't be a mark on their credit record


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  • #7
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    Spocker wrote: »
    Why would they ask for a top-up loan if the whole point of the OPs request is to stop paying the full amount for a couple of months? If they can come to an agreement with the CU regarding rescheduling the payments, then the loan doesn't go into arrears, and there won't be a mark on their credit record

    Because under current Central Bank rules, if the CU reschedules the loan, then then CU cannot give the OP another loan until this loan is cleared in full. Sounds unreasonable... it is.

    Reducing the repayments but leaving the original credit agreement in place will cause arrears on the persons ICB report... again impact the OP's ability to borrow


  • #8
    Spocker
    Moderators Posts: 6,864 ✭✭✭Spocker


    New loans can be taken out when a member has a rescheduled loan, once the ability to repay has been proven (Section 35, part 2.6).

    In any case, I'm still not getting your point badgerbroc11, why is taking out another loan helpful to the OP in this case, when they want to pause the payments for a period? They haven't indicated what their personal circumstances are (and we shouldn't be asking) - theres no indication that additional monies would solve it for them?


  • #9
    badgerbroc11
    Registered Users Posts: 141 ✭✭badgerbroc11


    Spocker wrote: »
    New loans can be taken out when a member has a rescheduled loan, once the ability to repay has been proven (Section 35, part 2.6).
    This reference is to the legislation, the Central Bank also make regulations. 2.5 of "S35 Regulatory Requirements for Credit Unions" states: "Subject to 2.6 a credit union must not approve further agreements for additional credit where an existing loan has been rescheduled" The document can be downloaded from the Central Bank Website
    Spocker wrote: »
    In any case, I'm still not getting your point badgerbroc11, why is taking out another loan helpful to the OP in this case, when they want to pause the payments for a period? They haven't indicated what their personal circumstances are (and we shouldn't be asking) - theres no indication that additional monies would solve it for them?

    It's only helpful in the context of the first point.


  • #10
    Spocker
    Moderators Posts: 6,864 ✭✭✭Spocker


    badgerbroc11 wrote: »
    This reference is to the legislation, the Central Bank also make regulations. 2.5 of "S35 Regulatory Requirements for Credit Unions" states: "Subject to 2.6 a credit union must not approve further agreements for additional credit where an existing loan has been rescheduled" The document can be downloaded from the Central Bank Website

    Yep, thats the one I was referring to
    Section 2.6 wrote:
    Where a member’s ability to repay all credit owed and the proposed additional credit has been clearly established, the credit union may determine it prudent to grant additional credit to a member with a rescheduled loan where that rescheduled loan has performed in accordance with the new terms for an appropriate period, in most cases not less than one year.

    However, us bickering over the finer points of the legislation and regulations don't help the OP, who should just go in and ask in her local CU


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