# Credit Union Loan & Savings - Suggestions?



## dcGT (4 May 2006)

Hi All,
I'm just wondering what you guys would do in this situation: -

I am currnently paying back a credit union loan of €5000 (€4,200 remaining)

I also now have savings in the Credit Union of €5000. 

I suppose it would be best to wipe out the loan using my savings but I've been told that doesn't look good on your history and that the Credit Union prefer people to pay back a loan regularly to build up a good history. I'm not sure how true this is.
I've also noticed that the interest rate on the loan with the Credit Union isn't great and it's obviously nowhere near the interest my savings will earn.

I don't want to build up a bad reputation with the Credit Union but at the same time I don't want to be paying interest on a loan when I don't have to.

Any help would be great,

Cheers,


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## elcato (4 May 2006)

While they do like to see how you cope with a loan they will not frown upon paying it off immediately. Personally I would pay-off immediately and then put the money you currently put in to service the loan into your share account. Making regular payments looks just as good as paying back regularly.


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## dcGT (4 May 2006)

Thanks elcato. That sounds like a plan.

Cheers,


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## CCOVICH (4 May 2006)

Any reason why you want to remain with the CU?


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## dcGT (4 May 2006)

Well they seem to useful for getting easy loans (which I could possibly need in the future), but their interest rate isn't the best around. Other than that, there's no other reason why I'm sticking with them.


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## CCOVICH (4 May 2006)

Well, if you have managed to accumulate savings of €5,000, I don't see why you would have trouble getting a loan elsewhere in the future (if and when you need it).


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## dcGT (4 May 2006)

That's a good point I suppose. I guess the credit union might just be handier for the smaller short term loan.

Cheers,


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## CCOVICH (4 May 2006)

By all means keep an account active, e.g. through a small balance, added to monthly perhaps, if you feel you will need their services in the future.  

But I would tend to go for more competitive loans and savings products.


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## dcGT (5 May 2006)

I might just do that CCOVICH, thanks for the advice. I think I'll put a small amount in the CU and put the rest in my Rabo savings account unless I can find a better place for it.

Cheers,


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## CCOVICH (5 May 2006)

Northern Rock offers a more competitive rate on deposits over €1,000.

If yiu want to save at least €10 a month regularly, AIB and BoSI will offer a better rate of return than Rabo.


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## dcGT (5 May 2006)

Are there any charges or minimum terms involved with these institutions? 
I do plan to save in the account also so I might take a look at BoSI and AIB

Thanks,


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## CCOVICH (5 May 2006)

Plenty of discussion elsewhere in the Savings and Investments forum on Northern Rock, AIB and BoSI, and in the Best Buys forum.


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## MugsGame (5 May 2006)

Also have a look at Anglo.
All three recent monthly savings products have different advantages and disadvantages. None have a minimum term or charges.

AIB's Regular Saver account is the most flexible and has the best interest rate, but it has the lowest maximum monthly payment.


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## dcGT (5 May 2006)

MugsGame said:
			
		

> AIB's Regular Saver account is the most flexible and has the best interest rate, but it has the lowest maximum monthly payment.


 
You also need to have an existing AIB account for this savings account.


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## MugsGame (5 May 2006)

True, hadn't noticed that. You can open a fee-free AIB demand deposit account and use that though, which makes it similar to Rabo with their free "current" account.


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## ontour (5 May 2006)

We are currently in a phase of easy credit and low interest rates which could be percieved to make the use of credit unions unattractive.  It is difficult to achieve the level of flexibility with repayment terms that a credit union offers with other financial institutions.  Most people will borrow at the level of repayments they can afford allowing extra cash for the unexpected expenses.  With a credit union loan, the quicker you repay it the less interest you pay.  There is no penalty for paying more.  Also there is inbuilt loan and savings death benefit protection insurance so the service offering is not as backwards as some might think.

To answer the question, it is true that historically credit unions based loans on a loans to savings ratio but most have changed this approach.  Paying off the loan and continuing saving will demonstrate a solid low risk member.  It is very important to realise that different credit unions have different polices, interest rates and products and most people have the option of which credit union to join based on their living location or work type or location.

They are not perfect but they do have a lot to offer


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