Have 6k loan in CU 3k savings. Can i touch savings?

Supergurrier

Was gonna go in tomorrow and see if i could take out 1k savings tomorrow.

Have heard differing stories of you need to leave from 20% to 33% of loan amount in savings or you cant touch at all?

Is there anywhere i can look this up.

athtrasna

Supergurrier wrote: »

Was gonna go in tomorrow and see if i could take out 1k savings tomorrow.

Have heard differing stories of you need to leave from 20% to 33% of loan amount in savings or you cant touch at all?

Is there anywhere i can look this up.

Depends on how long you're with them usually but first loan tends to be that you can't touch them while your loan is higher than your savings.

km79

Supergurrier wrote: »

Was gonna go in tomorrow and see if i could take out 1k savings tomorrow.

Have heard differing stories of you need to leave from 20% to 33% of loan amount in savings or you cant touch at all?

Is there anywhere i can look this up.

Entirely dependent on CU
We have 4K left on loan
1 k of shares frozen

Supergurrier

athtrasna wrote: »

Depends on how long you're with them usually but first loan tends to be that you can't touch them while your loan is higher than your savings.

4th loan. With them 5yrs or so. Make payments in person so they know the head on me.

athtrasna

Supergurrier wrote: »

4th loan. With them 5yrs or so. Make payments in person so they know the head on me.

All in your favour so

Supergurrier

Brother got a loan from a different cu but in same group in galway and was told 1/5th. Was his first loan with them. Will ask and report back anyway.

mickdw

Id say they would let you down to 2k in savings

As an aside, CU is incredibly expensive borrowing. That rule re keeping a percentage on deposit means people end up borrowing significantly more funds than they might need too otherwise, all the while paying heavy interest on the borrowing and getting next to nothing on the deposit.
If they want to run with the deposit idea, why not exempt that portion of the loan from interest - if its supposed to be the friendly non profit local bank.

Supergurrier

mickdw wrote: »

Id say they would let you down to 2k in savings

As an aside, CU is incredibly expensive borrowing. That rule re keeping a percentage on deposit means people end up borrowing significantly more funds than they might need too otherwise, all the while paying heavy interest on the borrowing and getting next to nothing on the deposit.
If they want to run with the deposit idea, why not exempt that portion of the loan from interest - if its supposed to be the friendly non profit local bank.

Afew CU got stung towards end of boom including my own one by taking on big loans from developers etc.

First loan i got in 2007 i went in to enquire not having any savings apart from 200e in my pocket and left with 6k cash.

Now its alot harder

RainyDay

mickdw wrote: »

Id say they would let you down to 2k in savings

As an aside, CU is incredibly expensive borrowing. That rule re keeping a percentage on deposit means people end up borrowing significantly more funds than they might need too otherwise, all the while paying heavy interest on the borrowing and getting next to nothing on the deposit.
If they want to run with the deposit idea, why not exempt that portion of the loan from interest - if its supposed to be the friendly non profit local bank.

Indeed, most CUs are not good for informing their customers about the true cost of borrowing, not just the APR on the loan, but the opportunity cost of borrowing more than they really needed by having to leave savings in the account.

I had a bit of a fight with my own CU as they weren't clear at all about this issue when I got a car loan from them.

OP - You might need to check the small print on your loan papers, or just go ahead with the withdrawal, and kick up a bit of a fuss about their failure to communicate conditions clearly if a problem arises.

Greenmachine

RainyDay wrote: »

Indeed, most CUs are not good for informing their customers about the true cost of borrowing, not just the APR on the loan, but the opportunity cost of borrowing more than they really needed by having to leave savings in the account.

I had a bit of a fight with my own CU as they weren't clear at all about this issue when I got a car loan from them.

OP - You might need to check the small print on your loan papers, or just go ahead with the withdrawal, and kick up a bit of a fuss about their failure to communicate conditions clearly if a problem arises.

Do people borrow more than they need just for the hell of it. Have we not said goodbye to that kind of attitude.

Supergurrier

Greenmachine wrote: »

Do people borrow more than they need just for the hell of it. Have we not said goodbye to that kind of attitude.

What rainyday is saying is that people ars borrowing more than needed because they have to leave a lump in an almost zero interest cu savings account.

Example 1: Tom needs a new tractor which costs 20k. He has 10k cash so he goes to bank to get a 10k loan to buy it. Tom now has 10k debt.

Example 2: Dermot needs a new tractor which costs 20k. He has 10k cash so he goes to Credit union to get a loan but thsy want him to have 5k in savings so he now has 5k and needs a 15k loan to buy it. Dermot now has 15k debt.

Sure dermot has 5k in savings but you get the idea.

RainyDay

Supergurrier wrote: »

What rainyday is saying is that people ars borrowing more than needed because they have to leave a lump in an almost zero interest cu savings account.

Example 1: Tom needs a new tractor which costs 20k. He has 10k cash so he goes to bank to get a 10k loan to buy it. Tom now has 10k debt.

Example 2: Dermot needs a new tractor which costs 20k. He has 10k cash so he goes to Credit union to get a loan but thsy want him to have 5k in savings so he now has 5k and needs a 15k loan to buy it. Dermot now has 15k debt.

Sure dermot has 5k in savings but you get the idea.

Yes, thanks for the explanation - and just to clarify further, Dermot is paying 6% to 10% on his loan, and is earning just 1% to 2% on his savings, so he is out of pocket by 5%-8% of the extra €5k he has borrowed.

Greenmachine

Apples and oranges in some senses. For smaller loans CU would have lower rates. Occasionally on larger loans too, in fact my local CU has a rate at the moment of 5% on loans above 20k, leixlip CU if you want to google it.

If you put your saving into a fixed term account in a bank you might attract less than 1% interest. 5k plus in a bank of ireland for 1 year fixed term account max 10% withdrawal. 0.64% you would achieve better interest in the CU and can access your funds at any time.

mickdw

I don't know what the story is with my credit union but there is 2 euro less in there now than what has been deposited.
So much for interest.
I ran some calculations awhile back to see what the true interest rate was on cu borrowing assuming 7.9 rate and assume that they gave 3 times deposit.
So allowing for the extra borrowings needed to leave a third on deposit, the equivalent rate was near 11 percent I think. I did assume zero interest on the savings though.