Credit Union Loan Question

The Witches Cat

Hi.
Im just in the middle of applying for my first credit union loan online. I have savings of about 5000 with them and i need 7000 in total for next month.
Seeing as i have 5000 in savings do i just borrow 2000 and withdraw the savings or do i borrow the full 7000?
Im doing it online and its asking me how much i want to borrow so not sure if i put in 7000 or 2000.
Any help much appreciated.
Thanks

the14thwarrior

they usually like you to keep half savings or so in your account. so thats what i would do. use half savings, half loan.
its up to you of course

Wardling

I have always borrowed the full amount and left my savings untouched.

Say for instance I had 150 going in a month to my savings, I borrowed the full amount of the loan and allowed 100 in repayments and 50 to continue topping up my savings until the loan is cleared and then the full amount reverts back to just paying into my savings.

Always worked out well as my savings were still growing albeit at a third off the normal rate and my monthly budget wasn't affected as my direct debit remained the same.

Wardling

The Witches Cat wrote:

Im doing it online and its asking me how much i want to borrow so not sure if i put in 7000 or 2000....

It could be better to apply over the phone as you can explain your need and get advice immediately on what they think is your best option and what you should apply for in total.

Darren 83

I dont think they will allow you take any savings out as this will be used as security against the loan.

Id apply in the Credit Union as online takes ages in my experience.

XsApollo

Their is no point in borrowing money you already have, it's costing you to do that.
If you are borrowing money from the credit union they will usually want you to leave the savings you have in there as protection against the loan.
So what's the point in having savings in there if you can't take them out when you want.
You can get them out if you really want but it's a bit of hassle.

Credit union rates are very high as well now I think. 10 to 12% last time I looked.


Have you tried a bank for the loan?

Your best best would be take out the 5000 you have and get a 2000 euro loan from a bank and start saving again.
It's the same thing except you are only Paying interest on the 2000 and not on 7000.
So then you can start saving again.
Lodge what the payments would of been on a 7000euro loan into your account again and you will get more for your money.
Hope that makes sense :-P

If you have a saving record of 5000 I don't think any bank would refuse you 2000.

PaulKK

My local credit Union requires you to pledge 10% (might be 20% for new members) against the loan. In your case they may require you to keep 1500 locked against a 7k loan which you cannot touch.

I would suggest doing this and keeping money in reserve if you afford the repayments. I would also suggest overpaying the repayments if that is within your means.

You would still have 3.5k available to you for emergencies doing this.

Edit, re the comment above, my local credit union has a rate of approx 8%, and typically offers a rebate of 30% on loan interest after the agm.

wordofwarning

CU's differ in what they require you to put down for a loan. Try use as much savings, as possible and as little borrowing as possible. There is no point borrowing, when you have cash sitting there earning 0.5% net of DIRT while borrowing at 10%