# Is Getting a Loan Against Credit Union shares a Good Idea?..



## faolteam (20 Jul 2015)

Hi im just looking for advice,

i wanted to get a loan for a car from the credit Union and i originally asked for an amount and the person said i should take it against my shares the rate been 6.5% 

What i just want to know is this a good idea as its against most of my savings and i would only have a small amount free, and also how does that work if god forbid i passed away during the loan would my wife still get my savings (shares) and would the loan also be paid ? 

or is it best to get it seperate?

Also should i get all the loan rather than say 75% of it any help appreciated,


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## galway_blow_in (20 Jul 2015)

I did not know you could borrow against shares


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## Monbretia (20 Jul 2015)

Not exactly shares as you are probably thinking,  credit union savings are called shares as the CU is owned by members.

It's a very common way of borrowing in credit unions and while it ties up your savings you also avail of a better rate usually as the loan is secured.


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## faolteam (20 Jul 2015)

yea there saying 6.5%  but i see motor car loans are 6.99%


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## Gerry Canning (21 Jul 2015)

Better rate is not huge .

eg 10,000 @ 6.5 over 36 mths = 306.50.
eg 10,000 @ 7.0 over 36 mths =  308.80.
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(g 10,000 @ 10% over 36 = 322.60)

So for lower rate that saves a little you tie up your savings .
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I think all credit unions cover all loans for death cover , means should you die loan is paid off + you can nominate wife as recipient of your savings , I think up to k20 , (ask union).
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I am not a fan of 100% loans , 75% sounds good.


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## Slim (21 Jul 2015)

faolteam said:


> Hi im just looking for advice,
> 
> i wanted to get a loan for a car from the credit Union and i originally asked for an amount and the person said i should take it against my shares the rate been 6.5%
> 
> ...


 
There are at least two ways of answering this. One, which is popular on here, is that you are borrowing your own money at 6.5% and receivng probably only about 1% if that on the savings. No sense in that! On the other hand, other view is that you get free Loan and Life insurance, i.e. if you should die, your loan will be cleared and your savings may be increased to a maximum of 100% of what you have saved to age 55, subject to a limit of doubling to about €13-14k.

You could set up a sub account, park most of your savings in that and borrow against what is left in the main account. You may pay a higher rate but you still have the benefits mentioned above. However, some CUs have differnt rules about setting up sub accounts.


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## faolteam (21 Jul 2015)

Thanks guys i have decided to gor for 75% and if i pay at the rate im going to i will have it covered in less than 2 years


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## Jacinta (29 Aug 2015)

I have a secured loan with my local credit union and was surprised to see on an earlier thread that people like me are basically seen as being a bit dumb! - i.e. why would you pay 5.5% on a loan and get virtually nothing on my savings. Well I am a very bad saver fact but I am great at paying loans so yes whilst I am paying back this loan I still have my savings and god forbid if something were to happen me my loan will be cleared and my family will have the benefit of my savings so yeah maybe I might be a bit dim but it works for me


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## wysiwyg (9 Sep 2015)

Thats an interesting point Jacinta. People are usually great at repaying a loan and less good at saving. So for most people it makes sense to borrow rather than use your shares/savings.

The point about getting 1% interest or dividend. Really earning 1% or half that is neither here or there. Even if you have €10,000 in savings you will get €100 before taxes of 41%, so you get €59 in a year. Its a lot less with AIB or BOI unless you fix your deposit for an set term.

Bur even if you don't tie up your shares when you borrow, your family will still get your shares, plus a life savings insurance (Can be double sometimes), plus the loan will be cleared in full, plus a death benefit of usually €1300
These benefits far outweigh the interest on savings. Its just a matter of making more use of your Credit Union !!


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