# New Credit Union Loan - but savings account frozen without being told.



## LeahAnderson133 (27 Jan 2020)

I got a car loan today, as I was in dire need of a new vehicle. While applying for the special car loan I was never told my already existing savings would be frozen.
In the meeting I had for the loan I even asked would i still be able to still take out money they told me it shouldn't be any issue. I had 7 thousand in my savings as it was the money I got from my dad dying. Today when I tried to take out 100 for school trip they told me I can't take out money as I have a pending loan. Is there anyway to unfreeze my account, my credit union wont help me at all.


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## PaddyBloggit (27 Jan 2020)

How much was the loan for?


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## Feemar5 (2 Feb 2020)

Generally savings are frozen until loan amount goes below savings amount.


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## DeeKie (3 Feb 2020)

LeahAnderson133 said:


> I got a car loan today, as I was in dire need of a new vehicle. While applying for the special car loan I was never told my already existing savings would be frozen.
> In the meeting I had for the loan I even asked would i still be able to still take out money they told me it shouldn't be any issue. I had 7 thousand in my savings as it was the money I got from my dad dying. Today when I tried to take out 100 for school trip they told me I can't take out money as I have a pending loan. Is there anyway to unfreeze my account, my credit union wont help me at all.


Complain in writing. You should have been informed in writing of this condition


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## Brendan Burgess (3 Feb 2020)

DeeKie said:


> You should have been informed in writing of this condition



That is a very interesting point.

Is it not enough that it is well known (?) that credit unions treat their share accounts as security for loans? 

I would suspect that it is on the loan documentation. 

Brendan


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## Monbretia (3 Feb 2020)

Does it mention it in the paperwork?  I'd be surprised if it didn't, did you get a secured loan rate, it's usually a better rate when it's backed by savings.


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## DeeKie (3 Feb 2020)

Brendan Burgess said:


> That is a very interesting point.
> 
> Is it not enough that it is well known (?) that credit unions treat their share accounts as security for loans?
> 
> ...


It’s not enough for it to be “well known” if it is a consumer contract, if it is in the documents it’s probably enough. If I were him/her I would ask where this is written down.


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## Brendan Burgess (3 Feb 2020)

DeeKie said:


> It’s not enough for it to be “well known” if it is a consumer contract,



OK. What is well known to you and me might not be well known at all. 

I presume that it has to be written down in the contract. 

Brendan


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## yildun (3 Feb 2020)

They use the shares in your account as security against the loan you have taken out  One advantage may be that when your loan amount is lower than your share amount you can requested a    covered loan       which in most CUs has a cheaper interest rate 

good luck


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## Mrs Vimes (3 Feb 2020)

yildun said:


> They use the shares in your account as security against the loan you have taken out  One advantage may be that when your loan amount is lower than your share amount you can requested a    covered loan       which in most CUs has a cheaper interest rate
> 
> good luck


I am bewildered as to how paying interest on your own money can be considered an advantage!


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## Monbretia (3 Feb 2020)

Some people like the discipline of having a loan to repay, it's seldom about the actual cost, some people will definitely pay back a loan but wouldn't put the same amount into savings if they had spare money, they would just spend it.    It's simply the way some people work best, yes they could do it cheaper but sure if it works for them!


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## yildun (8 Feb 2020)

HI Its a Covered Loan Your own money is used as security against the loan you have taken out  and  because its a secured loan you get a better rate of interest on that covered Loan  All covered loans are on demand  if you have 1000e in he Cu then u will get a 900e loan  No questions asked   and you  will not pay interest on your own money you pay interest on the loan   while your own money earns interest   not  a lot    and in the case of my CU I get some of the interest I pay back  again  not a lot
As Monbretia you could do it cheaper   the CU let you pay of the agreed amount or HIGHER each month so you can pay you loan of quicker and pay less interest

You dont have to take a loan you can just remove your own money from the CU  then you pay no interest at all  
thanks


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## Slim (8 Feb 2020)

LeahAnderson133 said:


> I got a car loan today, as I was in dire need of a new vehicle. While applying for the special car loan I was never told my already existing savings would be frozen.
> In the meeting I had for the loan I even asked would i still be able to still take out money they told me it shouldn't be any issue. I had 7 thousand in my savings as it was the money I got from my dad dying. Today when I tried to take out 100 for school trip they told me I can't take out money as I have a pending loan. Is there anyway to unfreeze my account, my credit union wont help me at all.


The credit union is only obliged to hold a minimum 25% of the value of the loan balance of your shares as security. If they are holding more you can write to them and ask them to release any shares in excess of this.


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