# Credit Union-Savings to Loan?



## annemarief8 (31 Jan 2008)

I have a 13k loan with my CU but i also have 4k in shares. does it make sense for me to keep it like this?

Am I entitled to go in and ask for my shares to be transferred off my loan, pay the rest of my loan and then start building my shares again?


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## ClubMan (31 Jan 2008)

Depends on the _CU _rules but in general borrowing €13K when you could reduce this to €9K doesn't make sense.


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## Happy Girl (31 Jan 2008)

In my credit union you can only borrow one third of what you have in savings. You must always have one third of outstanding loan on deposit at all times for the duration of the loan. If this were the case with your credit union you could not do what you propose.


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## annemarief8 (31 Jan 2008)

Is this the general CU rule does anybody know?


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## ClubMan (31 Jan 2008)

Check what rate they are charging in case it's cheaper to take your business elsewhere for a lower rate while not being forced to borrow more than you need to.


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## ClubMan (31 Jan 2008)

annemarief8 said:


> Is this the general CU rule does anybody know?


I think it varies from one _CU _to another.


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## irishpancake (31 Jan 2008)

I know what I would do.

Borrow €9k from another lender, such as Halifax or Tesco.

Then pay this off the the CU loan, and clear the outstanding amount from your credit balance.

Examples:

Halifax €9k over 3 yrs @ 8.5%APR costs €282.90p.m: cost of credit €1,184.44 

Tesco €9k over 3 yrs @ 6.9%APR costs €276.78p.m: cost of credit €964.08


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## Brendan Burgess (31 Jan 2008)

I understand that the Credit Union Act has a rule that you cannot reduce your shareholding below 1/3rd (?) of any loan outstanding. 

However, to get around this, progressive credit unions recommend to their members that they should withdraw almost all their shares before taking out a loan. There is no requirement in the Act that you must have money in shares to get a loan, but once you have a loan and shares, you can't reduce your shareholding below some limit.

The thing to do is to look for a cheaper loan elsewhere for the net amount.

Brendan


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## oldtimer (31 Jan 2008)

Brendan is spot-on. This is the advice given to me by my credit union.


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