# Finding 10y loan with Credit Union @ 12% difficult. New customers @ 6%!



## lagrefy (19 Oct 2010)

I've a good relationship with my CU, that has extended over many years.

I've a ten year loan with them and it's proving difficult to pay, due to changes in my circumstances. The loan is not in arrears at the moment, but I'm concerned about the months and years ahead.

The loan was taken out a few years ago and the interest rate is 12%.

 The same CU are now offering new loans to customers at 6%. I've spoken to them to explain my circumstances and ask if they can reduce the interest rate being applied to my loan. They are not prepared to budge on the interest rate and will not reduce it by even 1%. 

Unfortunately due to the change in my circumstances, I cannot secure a loan (or any other funds) from anywhere else at a lower interest rate, to pay off the CU one.

The 12% interest rate on this loan is a huge financial burden and it's frightening to see how little the loan balance is reduced by each monthly payment. It's also difficult to reconcile it with the same orgainisation giving out loans to new customers at half the rate I'm paying.

My next action will be request that they allow me to use the shares in the CU account to pay off the loan.

Is there anything else I can do?

Thanks in advance for your advice and suggestions!


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## lagrefy (21 Oct 2010)

lagrefy said:


> ...request that they allow me to use the shares in the CU account to pay off the loan...


 
They have refused to allow using the shares to pay off part of the loan. 

Anyone got any ideas or suggestions?

Thanks!


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## dahamsta (21 Oct 2010)

12% is ridiculous, can you borrow the full amount from somewhere and pay off the full loan, then reapply at the lower rate? If they won't give you a new loan, close your account and use your shares as an offset or as collateral with another lender.


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## lagrefy (21 Oct 2010)

Thanks for the suggestions dahamsta. I possibly could get a loan from a family member to clear the CU loan. But I really would prefer avoid that, because I'm not confident that I would be able to pay them back anytime soon and there is too much money involved. 

Unfortunately I can't borrow from any other financial provider because my income is much too low at the moment.


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## corkmike (24 Oct 2010)

Apply for the loan, if it is refused. Appeal to the board. If that is refused write to them saying you are going to complain to local press and publicly at their AGM which could be happening in a few weeks time (generally Nov / Dec or Jan each year) and that you will rally support that the rate is too high and penalizing the poorest members and that 12% is not fair etc.
Let us know how u get on.
Mike


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## ontour (24 Oct 2010)

I can understand that the credit union is trying to protect the income from existing loan agreements, I am sure lots of banks would like to ask their tracker mortgage customers to change to the current variable rate, but they would not like that!

Put the request in writing to the board, it may take a couple of weeks to process.  You should also go to MABS too assist you with financial planning and request a renegotiation from the credit union.


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## lagrefy (25 Oct 2010)

Thanks for the great suggestions.  I will write to the board and see where it goes from there.


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## PiedPiper (25 Oct 2010)

If I was you I would go into my branch and withdraw the funds in savings and go to the next desk and deposit them against the loan.

Not to do this is madness when you are paying 12%.

I would definitely also appeal to the board.

Good luck.


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## Sue Ellen (25 Oct 2010)

lagrefy said:


> *They have refused to allow using the shares to pay off part of the loan. *





PiedPiper said:


> If I was you I would go into my branch and  withdraw the funds in savings and go to the next desk and deposit them  against the loan.



If the credit union have confirmed that they will not allow the savings to be offset against the loan why would they allow someone withdraw the funds and then lodge them against the loan?


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## corkmike (26 Oct 2010)

Most credit unions will not let you withdraw the money as when the teller opens your account she will get a message that so many shares are tied or else the computer system will not allow her to let you make the withdrawal. This of course is depended on the computer system and how awake the teller is.
Regards
Mike


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## corkmike (26 Oct 2010)

Just remember go softly softly first.


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## Bluebells (26 Oct 2010)

lagrefy said:


> They have refused to allow using the shares to pay off part of the loan.
> 
> Anyone got any ideas or suggestions?
> 
> Thanks!



When the balance outstanding on the loan equals the amount in shares, then you can use your shares to clear the loan.


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## lagrefy (27 Oct 2010)

Thanks everyone! Unfortunately I can't withdraw the money until the loan is cleared.



Bluebells said:


> When the balance outstanding on the loan equals the amount in shares, then you can use your shares to clear the loan.


Yes, I can do that, but unfortunately there is a lot of loan to be cleared before I get to that level.


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## raymondo (2 Nov 2010)

lagrefy

to deal with the issue regarding your shares and your loan. Because the shares are used as security against your loan, you must apply to the board of directors to transfer an amount of shares against your loan BUT as long as the remaining shares will not be less than 25% of your outstanding loan..

I know you havent said how much your shares or your loan is so it may be the case that the rules of the credit union do not allow the transfer to occur.

An example Loan : 20000 Shares : 10000

You could request to transfer 5000 from your shares leaving LOAN 15000 / Shares 5000 (33%) . 

You could not request trnasfer 8000 for example as you would have LOAN 12000 / Shares 2000 (16%) and this isnt allowed.


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