Credit Union loans

Designator

Ok so I currently have a credit union car loan with about 1600 left to pay off. Im thinking of paying it off fully this week and then applying for a 5000 car loan to change cars. Is it as easy as simply going into the credit union and paying the 1600 using my debit card? Also is it easier to apply for a credit union loan once youve fully repayed one already or do you have to go through the same craic with the gaurantor and paperwork etc?

mickdw

I'd encourage anyone to look elsewhere. The credit union rates are generally shocking. Considering they like to lock down a large percentage of loan value in savings also, it's even more of a crazy rate.

sooty1

"'d encourage anyone to look elsewhere. The credit union rates are generally shocking. Considering they like to lock down a large percentage of loan value in savings also, it's even more of a crazy rate. " .........I would disagree strongly with the above, rates are very competitive for car loans and indeed as cheap as the garage finance in most cases.

Yes you can pay off your loan and reapply - yes you will need to fill in new application but the guarantor side of it will depend on your local credit union. Go have a chat with them they are normally very good at trying to help the member as much as they can.

mickdw

My local credit union is looking for 8.5 percent on car loans while holding at least a quarter of loan amount to ransom in savings. It's pretty expensive.
Unsecured car loans are available at 5.9 elsewhere.

evosteo

Was looking to get a loan from the credit union to carry out some home renovations. Shocked to see the interest rate, 10.5%,

Whats happend to the credit unions?

Are they over regulated now?

I thought the whole idea of a credit union was to help out people in thier local area financially?

With rates like that you would want your head checked to take out a loan.

The banks seem to have them where they want them

killbillvol2

evosteo wrote: »

Was looking to get a loan from the credit union to carry out some home renovations. Shocked to see the interest rate, 10.5%,

Whats happend to the credit unions?

Are they over regulated now?

I thought the whole idea of a credit union was to help out people in thier local area financially?

With rates like that you would want your head checked to take out a loan.

The banks seem to have them where they want them

You're the second poster who seems to think that all credit unions have the same rates. They don't. In my credit union a home improvement loan is 6.5% They have other loans at 5.5% and 4.9%.

mickdw

killbillvol2 wrote: »

You're the second poster who seems to think that all credit unions have the same rates. They don't. In my credit union a home improvement loan is 6.5% They have other loans at 5.5% and 4.9%.

You could also say they are the second poster to find very very poor rates at the credit union.
I genuinely don't see the point of them.

mickdw

killbillvol2 wrote: »

You're the second poster who seems to think that all credit unions have the same rates. They don't. In my credit union a home improvement loan is 6.5% They have other loans at 5.5% and 4.9%.

How much is a car loan at your credit union?

evosteo

killbillvol2 wrote: »

You're the second poster who seems to think that all credit unions have the same rates. They don't. In my credit union a home improvement loan is 6.5% They have other loans at 5.5% and 4.9%.

Surely its a covered loan at that rate?

Also to mention you need to have 1/3 of the loan request already in shares for for a €15k loan u need to have €5k in shares which you cant toich till the loan balance drops below the savings.

Crazy


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killbillvol2

mickdw wrote: »

How much is a car loan at your credit union?

6.5%

killbillvol2

evosteo wrote: »

Surely its a covered loan at that rate?

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5.5% for student loans. 4.9% for a covered loan.

mickdw

killbillvol2 wrote: »

6.5%

That s a hell of a lot better than my credit union and better than the rates shown above.

smelly sock

The simple fact is credit unions will loan to punters with a legacy of poor credit rating from the downturn. Banks and other lenders with lower rates wont touch them. Hence the reason they hold savings as collateral due to the risk.

mickdw

Will they though.
I know a credit union worker and she was saying that they are so regulated now that loan applicants need to meet similar requirements as they would in banks.
Needing to leave a third sitting is silly. Surely a more sensible policy might be to require 30 or 40 percent of the amount required in savings but then allow that this be used like a mortgage applicant would.
Leaving it sitting and paying stupid interest on maybe extra borrowings to account for locked down money is nuts.

evosteo

Honestly i thought that was the differance between banks and the credit unions. You essentially put your own money up as collateral against the loan you want and got a good rate in return vs banks etc...

Credit unions now seem to be working under the same processes as the banks with regards to loan applications. If you dont jump through the hoops they have then you wont get the loan your after.

I got a 10k car loan over 10 years ago from the credit union at a rate around 5%.

My aunt went as guantor as i hadnt enough savings.

Paid it back in 3 years with feck all interest on it

mickdw

evosteo wrote: »

Honestly i thought that was the differance between banks and the credit unions. You essentially put your own money up as collateral against the loan you want and got a good rate in return vs banks etc...

Credit unions now seem to be working under the same processes as the banks with regards to loan applications. If you dont jump through the hoops they have then you wont get the loan your after.

I got a 10k car loan over 10 years ago from the credit union at a rate around 5%.

My aunt went as guantor as i hadnt enough savings.

Paid it back in 3 years with feck all interest on it

They used to be great in fairness.
Now, not so much. They do the odd scheme which is useful where they will give out money in advance for medical procedures where the money will eventually be paid by the state. They is a good idea no doubt.

In general though, if you allow for the money you must leave sitting, and apply the interest rate to extra borrowings you may have to take because of leaving money sitting, it's borderline extortion.
3 to 4 percent is the max they should be charging. People are catching on I think cause our local one now has a problem in that they have too much cash on deposit and are looking to lend big-time. There is an easy answer - give proper rates.
Don't get me started on the share secured loan. Surely this should be at a rate just to cover admin, not the stupid figures they quote.

kippy

smelly sock wrote: »

The simple fact is credit unions will loan to punters with a legacy of poor credit rating from the downturn. Banks and other lenders with lower rates wont touch them. Hence the reason they hold savings as collateral due to the risk.

Not all credit unions require that amount of collataral. They also differ from branch to branch on rates.
They generally look at the ability to pay, rather than the amount of savings a person has.

While the rates may appear higher in som areas, they are generally far easier to deail with if there are issues.

OP, yes you can go in any pay off your existing loan and apply for a new one. Whether you need to redo all the paperwork again is something only the CU can answer.

evosteo

evosteo wrote: »

Shocked to see the interest rate, 10.5%,

Whats happend to the credit unions?

They're trying to make money to stay afloat. The majority of Credit Unions are drowning in deposits - people think they're 'helping' credit unions by having big savings balances but the reality is that even with investing this money the credit unions get very little, if any, interest on huge sums of money on deposit. Some investments have negative interest rates, i.e. it costs the credit union money to look after your money for you. Loans are one of the few ways credit unions can actually generate income and they have salaries, rents, overheads etc. to pay.

mickdw

Deleted User wrote: »

They're trying to make money to stay afloat. The majority of Credit Unions are drowning in deposits - people think they're 'helping' credit unions by having big savings balances but the reality is that even with investing this money the credit unions get very little, if any, interest on huge sums of money on deposit. Some investments have negative interest rates, i.e. it costs the credit union money to look after your money for you. Loans are one of the few ways credit unions can actually generate income and they have salaries, rents, overheads etc. to pay.

Yes too much funds on deposit so surely sensible management would keep same lending criteria or even more strict re income and ability to pay but give the loans at good rates to save themselves the costs of holding money on deposit and make money on the resulting loans.
There are unsecured loans available from avantcard for example for 5.9. Credit union would want to be doing 4 percent to account for the money on lockdown.

killbillvol2

mickdw wrote: »

Yes too much funds on deposit so surely sensible management would keep same lending criteria or even more strict re income and ability to pay but give the loans at good rates to save themselves the costs of holding money on deposit and make money on the resulting loans.
There are unsecured loans available from avantcard for example for 5.9. Credit union would want to be doing 4 percent to account for the money on lockdown.

We're coming out of a recession and a lot of people who use credit unions are saving for a rainy day. They're not reckless borrowers and are still wary of owing money. They're essentially sticking it under the mattress for the moment.

My credit union had a savings to loan ratio of about 1:10 when I joined in the 80s. Now it's closer to 10:1 despite offering decent rates. And PCP is killing car loans.

mickdw

Pcp isn't magic. Only zero interest deals on new cars make sense.
There is still a huge market for loans for used cars specially for UK purchases and the credit unions should be offering a better product.
You might argue.that their members are diligent savers and are not reckless borrowers, that should arguably allow even better rates as it would mean very low rates of default.
I think they will die as now they are just a poor performing bank. Gone are the days of the person with no income records obtaining loans based on past history of repaying. Even the most outrageous bank would find it difficult.to advertise with a straight face, giving you the use of your own money and charging 5 percent.

fergus1001

I think what people miss here is that you pay interest on the balance of the loan rather than the principal so the rates are actually lower than advertised

mickdw

fergus1001 wrote: »

I think what people miss here is that you pay interest on the balance of the loan rather than the principal so the rates are actually lower than advertised

Explain that please. If I understand you right, many loans have interest calculated on the reducing balance.

Dodge

The bottom line is that asking about rates and qualifying criteria in ‘the credit union’ is the same as asking about them in ‘the bank’

They all have their own rates, and their own lending criteria.

If you’re looking to get any kind of loan, look at all your options and do what’s best for yourself

mickdw

mickdw wrote: »

Yes too much funds on deposit so surely sensible management would keep same lending criteria or even more strict re income and ability to pay but give the loans at good rates to save themselves the costs of holding money on deposit and make money on the resulting loans.
There are unsecured loans available from avantcard for example for 5.9. Credit union would want to be doing 4 percent to account for the money on lockdown.

Reducing the rates actually has very little impact on the volume and scale of money being lent out from credit unions, which is why most of them don't reduce the rates. Occasionally they'll run promos in the year with much lower rates but the uptake versus a non-promo rate doesn't vary all that much. This lockdown thing doesn't apply to all loans at all CUs either.

However on the upside for customers is that they do allow you to clear the loan in full whenever you like with no penalties and are generally more supportive of people who get into difficulty repaying. For the odd percent or two in the difference I'd always go to a CU before a bank.

smelly sock

The credit unions will loan to you if you are a long time member with savings and a good repayment history with them. In my experience after falling ino trouble with the mortgage like hundreds of thousands of others during the recession no bank will touch me. The credit union have been lending to me. They are a life line for manym

fergus1001

mickdw wrote:

Explain that please. If I understand you right, many loans have interest calculated on the reducing balance.

exactly you are paying interest on what is left to be paid rather than the value of the entire loan

Spocker

Don't forget too that Credit Unions can pay a dividend to members (albeit small), pay interest rebates on loans, offer Loan/Savings Protection, Death Benefit Insurance, car draws, scholarship draws, etc - all for little or no cost to the member. Many Credit Unions also contribute back to their local communities, which can be an 'incentive' for savers

Cape Clear

My local credit union made an operating loss last year quite simply because there aren't enough loans been taken out by the membership coupled with the low interest rates on deposits. The facility which allows people to pay back loans earlier was key to this happening. I got some very nasty looks when I proposed the CU should look into restricting the amount people can over pay on loans. It was also mentioned that the marketing activities for the year mainly consisted of giving talks to local primary school pupils to grow the membership. This may result in membership growth but will do very little grow the loan books in the short term. The locality would be an older and mostly middle class suburb.