What requirements are needed for a Credit Union loan?

MrLucidLJ

I myself setup a Credit Union loan and saved money in it this past year but have taken that money out for things that were needed. If I wanted to get a loan out what are some of the requirements I would need to avail of a loan?

Spocker

MrLucidLJ wrote: »

I myself setup a Credit Union loan and saved money in it this past year but have taken that money out for things that were needed. If I wanted to get a loan out what are some of the requirements I would need to avail of a loan?

I think you mean you've setup a Credit Union account, and now you're looking for a loan?

Every Credit Union is different, and each assess an individual loan according to their own policies, but generally the criteria are:

- you're a member with a savings history (you are)
- you consent to an ICB check
- you can prove proof of income
- you're not already excessively in debt; your debt-to-income ratio will be calculated as part of the application

The amount of your current savings will be evaluated against the overall loan amount, but it is not a strict criteria (it's unlikely get a loan of 10k if you only have €100 in the account for example)

MrLucidLJ

Spocker wrote: »

I think you mean you've setup a Credit Union account, and now you're looking for a loan?

Every Credit Union is different, and each assess an individual loan according to their own policies, but generally the criteria are:

- you're a member with a savings history (you are)
- you consent to an ICB check
- you can prove proof of income
- you're not already excessively in debt; your debt-to-income ratio will be calculated as part of the application

The amount of your current savings will be evaluated against the overall loan amount, but it is not a strict criteria (it's unlikely get a loan of 10k if you only have €100 in the account for example)

Thank you for the reply and the information much appreciated. Lets say for example I would want €500-€1000 do I need a certain amount in my account. I heard its supposed to be 10% of what you have saved. This would be considered a personal loan at 9% as well correct?

coylemj

MrLucidLJ wrote: »

Lets say for example I would want €500-€1000 do I need a certain amount in my account. I heard its supposed to be 10% of what you have saved. This would be considered a personal loan at 9% as well correct?

No two credit unions are the same, it's really pointless asking those kinds of questions here - go and ask the people in the credit union.

MrLucidLJ

coylemj wrote: »

No two credit unions are the same, it's really pointless asking those kinds of questions here - go and ask the people in the credit union.

Its a bit weird that a state institution like the Credit Union doesn't have uniformed guidelines for all branches and that they are all run differently.

Macy0161

MrLucidLJ wrote: »

Its a bit weird that a state institution like the Credit Union doesn't have uniformed guidelines for all branches and that they are all run differently.

I think they do have much more standard, and strict, rules now. It's not a whole lot different from a bank loan application process nowadays - old style multipliers of shares to potential loan value, (including taking out shares built up, which is also more restricted now), have really moved credit unions away from their founding principles (imo).

Spocker

MrLucidLJ wrote: »

Its a bit weird that a state institution like the Credit Union doesn't have uniformed guidelines for all branches and that they are all run differently.

Credit Unions are not State Institutions; each is independently owned (by it's members) and operated*, which is why they all have different policies. Thats the whole point really, is that they are local, and have local knowledge. They do now fall under Central Bank governance, resulting in similar process in each


* Some have merged recently, but the idea is still the same

MrLucidLJ

Macy0161 wrote: »

I think they do have much more standard, and strict, rules now. It's not a whole lot different from a bank loan application process nowadays - old style multipliers of shares to potential loan value, (including taking out shares built up, which is also more restricted now), have really moved credit unions away from their founding principles (imo).

So your saying that there is a more nation wide standard then it used to be because another lad saying it was branch to branch. So what are the core differences then from their initial set up years ago to their new style of principles, would you say that the credit unions biggest changes are?

MrLucidLJ

Spocker wrote: »

Credit Unions are not State Institutions; each is independently owned (by it's members) and operated*, which is why they all have different policies. Thats the whole point really, is that they are local, and have local knowledge. They do now fall under Central Bank governance, resulting in similar process in each


* Some have merged recently, but the idea is still the same

Oh I thought they were a state owned thing my bad I was misinformed. But who came up with the name credit union I don't know the history behind it? Its weird having one name as Credit Union but then each branch has its own policy. I think that they should all have the same model in terms of why and what they are lending for but have the local knowledge as well included to applications.

BuffyBot

MrLucidLJ wrote: »

Oh I thought they were a state owned thing my bad I was misinformed. But who came up with the name credit union I don't know the history behind it? Its weird having one name as Credit Union but then each branch has its own policy. I think that they should all have the same model in terms of why and what they are lending for but have the local knowledge as well included to applications.

You were, for sure.

"Credit Union" is a term, like "bank" not a name in itself. Its a grouping of people coming together (as a union) to facilitate saving money and lending (giving credit).

Do all banks with the word "bank" in their name gave the same policies? Nope.

The whole point of Credit Unions that they look at their members needs with more flexibility than big faceless institutions, because the member is part owner of said CU. They don't apply the cookie cutter approach, and treat people as just "customers". Some were a bit too fast and loose with their lending/lending procedures years ago before things went bust and they have become a bit more professional and uniform in some respects but still retain considerably more independence in deciding loans and lending policy than bank branches.

Macy0161

Well my experience is that credit unions now require much more documentation than they used to. When I first joined, it was a case of regular saving, and then you could get a loan based on a multiplier of those savings. In my credit union it used to be 4 times shares. You could also withdraw shares, once you left in at least a quarter of outstanding loan value.

My last loan, I had to provide bank, credit card and mortgage statements. There's no clear definition of what you can borrow. All loans had to go for (monthly) board meeting. Similarly, when I tried to withdraw shares, I could only withdraw from what I had put into savings since the loan (I.e I can't access my own savings). The reason quoted was "Central Bank Rules". My credit union merged/ was subsumed into a larger credit union in the last few years - the new rules are consistent across both.

The whole point was to give people access to loans, quickly and easily with minimum fuss. My experience is that it's gone away from that model, which seems to be reflected in the numbers going to loan sharks.

MrLucidLJ

BuffyBot wrote: »

You were, for sure.

"Credit Union" is a term, like "bank" not a name in itself. Its a grouping of people coming together (as a union) to facilitate saving money and lending (giving credit).

Do all banks with the word "bank" in their name gave the same policies? Nope.

The whole point of Credit Unions that they look at their members needs with more flexibility than big faceless institutions, because the member is part owner of said CU. They don't apply the cookie cutter approach, and treat people as just "customers". Some were a bit too fast and loose with their lending/lending procedures years ago before things went bust and they have become a bit more professional and uniform in some respects but still retain considerably more independence in deciding loans and lending policy than bank branches.

No I understand not all banks have the same policies but a branch like AIB have their name for the bank nationwide and surely most branches ahear to the same policies because its all under one banner. I was just wondering where the name Credit Union came from so that the name is nationwide like a big branch. Well you can say that again. I know some people getting 10k plus and having hardly any savings behind them and others getting big loans with their only income being the social welfare which is complete madness.
But the fact that it had to take a financial crisis to get them more uniform is a little worrying. At least they would be more prepared if the country went into another recession in the future. I do like that they are more flexible in their approach to giving out loans rather then a bank who feel a little too corporate.

MrLucidLJ

Macy0161 wrote: »

Well my experience is that credit unions now require much more documentation than they used to. When I first joined, it was a case of regular saving, and then you could get a loan based on a multiplier of those savings. In my credit union it used to be 4 times shares. You could also withdraw shares, once you left in at least a quarter of outstanding loan value.

My last loan, I had to provide bank, credit card and mortgage statements. There's no clear definition of what you can borrow. All loans had to go for (monthly) board meeting. Similarly, when I tried to withdraw shares, I could only withdraw from what I had put into savings since the loan (I.e I can't access my own savings). The reason quoted was "Central Bank Rules". My credit union merged/ was subsumed into a larger credit union in the last few years - the new rules are consistent across both.

The whole point was to give people access to loans, quickly and easily with minimum fuss. My experience is that it's gone away from that model, which seems to be reflected in the numbers going to loan sharks.

How long did you used to have to save for before you were eligable for a loan? And it seems fair enough that you had to provide extra documentation that just seems procedural. Is that a good thing that your credit union has merged with a larger entity? Well I notice the rise of something like a providence with high interest rates and long periods where you can pay back the loan. I think they could have been too soft on loans before but you don't want to make it where it is too strict where it is putting people of the service.

coylemj

MrLucidLJ wrote: »

Oh I thought they were a state owned thing my bad I was misinformed. But who came up with the name credit union I don't know the history behind it?

I don't know when they started calling themselves credit unions but the ethos is based on the old industrial and provident societies (collectively known as 'friendly societies') which were co-operative savings societies for the workers in a factory (Industrial Society) or for the general population of a town (Provident Society).

Up to the early 1970s, most people working in factories and in other manual jobs did not have a bank account, they were paid in cash and lived from one week to the next. Industrial and Provident Societies were set up to allow people to save money, to extend loans to members to buy furniture and the like, and to help people pay for funerals.

They were originally regulated by the Industrial and Provident Societies Act 1893, today the relevant legislation is the Credit Union Act 1997.