# Credit Union --- best for loans --- what a joke!



## johnnybegood

Hi just enquire about a credit union loan for 2k and this is what they qouted:

12 mths (52 weekly payments)

total payment €45    (split capital €38.46 and balance €6 odd interest)

I have prepared this. On that basis the interest is 30%

*TERM**LOAN**             30%             **       PAID   **      BALANCE**€**               €**               €           **             €*1             2,000                50.00                 195.00               1,855.00 2             1,855                46.38                 195.00               1,706.38 3             1,706                42.66                 195.00               1,554.03 4             1,554                38.85                 195.00               1,397.89 5             1,398                34.95                 195.00               1,237.83 6             1,238                30.95                 195.00               1,073.78 7             1,074                26.84                 195.00                  905.62 8                906                22.64                 195.00                  733.26 9                733                18.33                 195.00                  556.59 10                557                13.91                 195.00                  375.51 11                376                  9.39                 195.00                  189.90 12                190                  4.75                 195.00 -                    0.36 

Am i missing something here how ridiculous is that!!!!

Same info based on 18 mths works out at 20.5% !!!! RIP OFF

*TERM**LOAN**20.50%**PAID **BALANCE**€**€**€**€*1             2,000                34.17                 130.00               1,904.17 2             1,904                32.53                 130.00               1,806.70 3             1,807                30.86                 130.00               1,707.56 4             1,708                29.17                 130.00               1,606.73 5             1,607                27.45                 130.00               1,504.18 6             1,504                25.70                 130.00               1,399.88 7             1,400                23.91                 130.00               1,293.79 8             1,294                22.10                 130.00               1,185.89 9             1,186                20.26                 130.00               1,076.15 10             1,076                18.38                 130.00                  964.54 11                965                16.48                 130.00                  851.01 12                851                14.54                 130.00                  735.55 13                736                12.57                 130.00                  618.12 14                618                10.56                 130.00                  498.68 15                499                  8.52                 130.00                  377.20 16                377                  6.44                 130.00                  253.64 17                254                  4.33                 130.00                  127.97 18                128                  2.19                 130.00                      0.16              340.16 

PLEASE SOMEBODY CORRECT ME IF I AM WRONG WITH MY CALCUALTIONS CAUSE THIS JUST SHOCKS ME. the most vunerable of people borrow from the credit union and this is the rates they charge. Then i read in the paper that ifsra have said they are better value for loans then anybody else!!! What a load of BS!!!

By the way the qoute was provided by west cabra credit union SHAME ON YOU!!!!


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## CCOVICH

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I presume that it's €45 per week?


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## johnnybegood

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

correct €45 per week split 39 euro capital and 6 interest. seems crazy % of interest


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Who says that they're best for loans? Certainly not many _AAM _contributors if you check out previous discussions about the lending policies and rates of the _CU_. By the way, the effective cost of the loan will also be inflated by the general need to keep money on deposit or in shares while borrowing. Ask them to quote an _APR _for the loan (including the cost of keeping money in deposits/shares) and see what they say.


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## johnnybegood

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Hi Clubman,

It was in the irish independent about a week or so ago. the article qouted Ifsra information and it stated the credit union was best value.

I remember it because i was telling my father in law how bad of a deal the credit union give in comparsion to Tesco, Nib etc. He then brought home a photocopy of this artice and said why does it say here its the best rate.

It really got on my nerves cause not once int he article does it mention any individual credit union or any specific rates and this is from ifsra !!!! Bad information !!


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## johnnybegood

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Apr for the 12 month repayment term is 17% (ignoring interest earned on maintaining savings) and for the 18 month term its also 17% (again ignoring interest on savings)

seems to me that a credit card would offer better value!!! 
I understand that this was discussed in detail before and i have seen the previous discussions but i just wanted to remind people of the rip off that is taking place and especially in disadvantaged areas such as cabra. 

before anybody tears me apart for calling cabra disadvantage wake up to the truth it is .... i should know i was born and bred there and only moved away form the area six months ago so thats 25 years of experience i love the place but the facts speak for themselves.

john


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				johnnybegood said:
			
		

> It was in the irish independent about a week or so ago. the article qouted Ifsra information and it stated the credit union was best value.


Well, if they said that then they are obviously very wrong.


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## ajapale

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

From memory I think that the Irish Independent stated that _some_ Credit Unions offered fairly good rates (and even these were not as good as some of the financial institutions).

The IFSRA report may be availiable on line, if I find the link Ill post it [broken link removed]. (Its the 5th pdf document in the list.)


The issue of credit unions and personal loans was discussed here last year.

aj


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## WizardDr

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

As far as I know most credit unions charge interest bewteen 6-12% with the upper APR being abiut 12.7%.  Paying a weekly amount is what credit unions do to facilitate payments. If they said €45 per week, all that happens is that the capital goes down faster. You have assumed that it was €45 each week to clear the loan. Ask them the 'rate' first. When you examine your statement you should be able to see the breakdown. As an example, once you pay the first amount, the interest would reduce and so on. So multiplying your €6 by 52 by 2 would be wrong to start with.

Also, even though IFSRA is a bureaucracy, when they release facts, particularly when they dont correspond with your own, would lead me (if I were you) to recheck your assumptions.

Ranting like you did, and dismissing the whole lot as a form of exrement, is in my view, shooting from the hip. Put the gun away. Sit down and recheck your calculations.


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## angie

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

as far as i know that 6€ would be split between interest and savings.  As the balance goes down more goes to savings and less to the interest.


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## lemeister

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I also believed that credit unions were only allowed charge 1% interest per month max and so 17% seems incorrect


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## Slim

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Jo(h)nnybegood

The maximum rate of interest a CU can charge is 1% per month, or 12.68% p.a. The new credit agreement must have the APR stated on it but you probably did not get that far. Is it possible that you were also quoted for Repayment Protection Insurance? Since you were wrong in your original figures, I would have to say the rest of your post, or should I say rant, must also be under scrutiny.

Slim


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## Bruze

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

i realise that this tread is a little old but i had an issue with a credit union loan recently that i am still trying to sort out. 

got quoted for 24k over 9 years

There interest rate quoted was 9.8%


They quoted me €400 as the monthly repayments on this?
And that doesnt include shares. 

i have worked it out to be €335/month

Their interest amount seems correct but they have me paying back a larger capital amount. 

Has any1 else had any experience with this?

Would CU's not usually have to abide by normal APR repayments?


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## ritab

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I was looking for a loan recently. My bank will give it to me at 5.7% but the Credit Uinion are charging 9.6% and that also means your savings are tied up.


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## darag

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Something very very wrong there, Bruze.  9.8% (anualized) should mean repayments of just under 330 a month.  Or as you have calculated, 335 a month if the 9.8% is 12 times the monthly rate.  400 a month corresponds to 15.6% APR.  If there is a mandatory savings requirement on top of this then the rate could easily be mid 20s.  That's usury.  Ask them how they calculated the interest rate or repayment amount.



> Also, even though IFSRA is a bureaucracy, when they release facts, particularly when they dont correspond with your own, would lead me (if I were you) to recheck your assumptions.


You are being too trusting, Wiz.  If you followed one of the previous discussions on this issue, you would have seen it demonstrated that the IFSRA don't seem to know their arses from their elbows when it comes to basic interest rate calculations.  There were numerous mistakes in their last published value-for-money "comparison".


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## darag

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Forgot to mention, while johnnybegood's tone might be a bit shrill, he's right to be outraged.  45 euro a week for 2K is about 37% APR which is outragous.


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## JoeB

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I reckon the first guy is paying interest at 17% APR...

He's paying €45 per week for 52 weeks = €2,340..

Interest = €340.

Interest as percentage = (340/2000)*100 = 17%

Since the interest is paid over one year and there are no additional charges then the APR = max 17%.

is this right?
Joe


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## dam099

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				JoeBallantin said:
			
		

> I reckon the first guy is paying interest at 17% APR...
> 
> He's paying €45 per week for 52 weeks = €2,340..
> 
> Interest = €340.
> 
> Interest as percentage = (340/2000)*100 = 17%
> 
> Since the interest is paid over one year and there are no additional charges then the APR = max 17%.
> 
> is this right?
> Joe


 
You have made no adjustment for the fact that the balance is reducing over time. AFAIK the APR will take account of the balance outstanding after each instalment.


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## Berni

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				JoeBallantin said:
			
		

> He's paying €45 per week for 52 weeks = €2,340..
> 
> Interest = €340.



However, if you factor in the fact that most credit unions require savings of €2 per week, its €43 x 52 = €2236
2236/2000 = 1.118 or a rate of 11.8%


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## darag

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



> I reckon the first guy is paying interest at 17% APR...
> 
> He's paying €45 per week for 52 weeks = €2,340..
> 
> Interest = €340.
> 
> Interest as percentage = (340/2000)*100 = 17%


No, the APR is roughly twice 17% (a little bit more actually).  As dam009 says, you've paid 340 on a reducing balance.  To do a "rule of thumb" calculation for something like this, you can half the loan amount (because, roughly speaking, on average over the year he only owes 1000 - at the start obviously he owes much more but towards the end he owes much less), so he is paying 340 interest for the pleasure of having 1000 for the year which is 34%.  The reality is actually more complicated because, the portion of the 45going on interest and against the capital is changing thoughout the term of the loan but the "half the total" rule of thumb gives a reasonable estimate if the number of repayments lie within a certain range.  The only way to get a true figure is to use Excel or a real financial calculator.


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## Bank Manager

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

First things first - I'm a banker......

Working on the basis that the original figures quoted in this post are correct, if I were to quote repayments of E45 on a E2,000 loan over 12 months (based on 52 weekly payments), the rate I'd be quoting would be 32.91% (APR 37.2%). Not doubting you, but are you sure your figures are correct?

BM


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## Guest127

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

dundalk credit union now advertise 6.95% as their loan rate. also they usually give a 'rebate' on the interest paid when they declare a divi. that said when I was shopping around for a €20,000 car +tidying up loan 4 years ago bank of ireland beat them out of site. I took out the €20,000 loan over 60 months fixed and I repay €394.25 per month. I refused to take out insurance etc. (I fixed because I had heard that interest rates were going up. something like hearing house prices will fall if you ask me.)
I only get yearly statements and the latest one dated 01/06/2005 states at the bottom - 23sept 2004 - LENDING RATE TO DATE 4.14%. and on 01/06/2005 I still owed €8543.09 after 35 of the 60 repayments.
I shopped around for this loan and they were the best at that time. happy enough.


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## JoeB

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



> Bank ManagerFirst things first - I'm a banker......
> 
> Working on the basis that the original figures quoted in this post are correct, if I were to quote repayments of E45 on a E2,000 loan over 12 months (based on 52 weekly payments), the rate I'd be quoting would be 32.91% (APR 37.2%). Not doubting you, but are you sure your figures are correct?
> 
> BM


 
Interest is max 17%, can you please explain how you derived your figures??


from Oasis.Gov.ie
Advertisements of credit must contain:
The Annual Percentage Rate (APR), which must be shown in a very prominent place. A definition of APR is "the total cost of credit to the consumer, expressed as an annual percentage of the amount of credit given". 


The guy pays E340 in interest on a E2,000 loan over one year...
total cost of credit = 340
amount of credit given = 2000
ergo APR = 17%

am I wrong?

Cheers 
Joe


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## Bank Manager

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Joe - you are correct with your E340 interest charge and that represents  17% of E2,000 borrowed.... however you must factor in the fact that the E2,000 isn't borrowed for the full year (as both interest and capital are being paid off each week) - as a very rough rule of thumb, and this isn't an exact science, if customer borrows E2,000 over a year, the average balance on the loan for the year will be E1,000, then if you apply the E340 charge on the average balance you'll come up with an interest rate of 34%!  After that (in my bank's case, we actually charge the interest quarterly) the APR will work out as I've quoted.

As I said in my initial post, while the Credit Union would be a competitor of mine, I'd doubt they are charging this rate of interest, but I could be wrong...........

BM


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## extopia

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Eh, would anyone here borrow from a CU?

I think we all know that CUs do not and in fact cannot compete with the banks. The traditional advantage of the Credit Union was that it was easier to get a loan from them as long as you were a saver. Remember not so long ago when the major banks didn't even deign to get into the mortgage market? They were only interested in lending to low risk customers.

Times have changed. The banks have relaxed their credit rules and everyone is climbing over everyone else to lend money to anyone who can breathe. In this market the CUs can't compete, except for the business of the few who still have difficulty in getting credit from the banks.


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## vladamir

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

for what its worth, perhaps not much, but here we go:

when i was a wee lad!, not all too long ago - 

the credit union gave me an unsecured loan (as a 17 year old) for a motorbike - what bank would do this?

perhaps the rates were high, i didn't care then - i paid them off in a few weeks - my experience of banks is that if you enter a 12/24 month loan contract you are stuck with it, save for paying penalty escape fees - the credit untion take whatever you give them - when i sold the bike i just cleared off the loan. i think (i know i'll be savaged for this) credit unions (certainly my one) has a friendly feel - they encourage you to come in and they look delighted to see you - my bank on the other hand....... i accept that you're not paying for friendliness - but on small term loans over a short period - i think the credit union are great.

also - last time i was in, they surveyed me as to whether i'd be of a mind to take out a mortgage with them, they must be thinking of expanding into this area?

also - correct me here - but, if you have a propensity for bad debts - i dont think the credit union can blacken your credit record? - i've always paid them off though, i think they give a great service.

would i be correct in saying that credit unions are predominant in working class areas? - where credit was generally unatainable and the 'ould' credit union was an alternative to the money lender?  that said, my credit union is an dawson street!!


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## dam099

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				JoeBallantin said:
			
		

> The guy pays E340 in interest on a E2,000 loan over one year...
> total cost of credit = 340
> amount of credit given = 2000
> ergo APR = 17%
> 
> am I wrong?
> 
> Cheers
> Joe


 
Yes there are at least 3 posts above explaining why you are wrong.


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## Observer

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				vladamir said:
			
		

> that said, my credit union is an dawson street!!


 
Funny, so is mine!  And a great bunch they are too....... can't do enough for you.


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## bskinti

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

As far as I know when you borrow from credit unions you pay interest on all money including your own money in shares and at the end of the year approx November you will returned on shares and interest paid during year and when one goes again the other the final interest is very little, Remember credit unions are supposed to be  a non profit organization.


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## Crugers

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I suspect that the replies here are based on incomplete original information and therefore make computation of APR and interest impossible.
I suggest that the original stated repayment €45 x 52 weekly repayments contained principal, interest and a "saving" element.
However IF (note the big if)
the rate of interest charged by any credit union exceeds the maximum of 1% per month, and 
the credit union knowingly charged or accepted the interest
then it could be that *the Credit Union would be "...Best for loans...".*
Why? Because...
The Credit Union Act, 1997 Section 38(2) states that:

_*If a credit union knowingly charges or accepts interest on a loan at a rate greater than that permitted under this section, it shall be guilty of an offence and—*_
_*( a ) all the interest agreed to be paid by the member shall be deemed to have been waived by the credit union; and*_
_*( b ) any interest paid on the loan shall be recoverable summarily by the member (or his personal representative) as a simple contract debt.*_

So! You would be legally entitled to an interest free loan!
Not to be laughed at and *NO JOKE*!


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				bskinti said:
			
		

> As far as I know when you borrow from credit unions you pay interest on all money including your own money in shares


Surely this is wrong. You pay interest on the loan amount outstanding. You earn dividends on any shares invested or interest on any deposits maintained. The problem is that the cost of borrowing is inflated by the need to keep money in shares/on deposit while borrowing even though you get a return on the latter.


> Remember credit unions are supposed to be  a non profit organization.


Are you sure about that? I thought that they were not averse to making profits and investing them in the union or returning them to members as dividends?


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## colc1

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				ClubMan said:
			
		

> Surely this is wrong. You pay interest on the loan amount outstanding. You earn dividends on any shares invested or interest on any deposits maintained. The problem is that the cost of borrowing is inflated by the need to keep money in shares/on deposit while borrowing even though you get a return on the latter.
> 
> Are you sure about that? I thought that they were not averse to making profits and investing them in the union or returning them to members as dividends?


 
I think you're right about the profits point clubman


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## Crugers

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

_"...credit unions are supposed to be a non profit organization..."_

Credit Unions are "not-for-profit organisations" i.e. their motivation is not simply to make profits. Their raison d’être is to provide service to their members/shareholders/owners. Each shareholder is a member and each member is an owner. It is hard to make a profit from yourself!

If they make a surplus, at year end it should be, and usually is, allocated to reserves, dividends, deposit interest and repayment of loan interest in ways that benefit the members/shareholders/owners.


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## colc1

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

That would have been my understanding you could do well dividends-wise though (possibly) if other members were taking out a lot of large loans and hence paying a lot of interest assuming this was passed on to dividend holders of course, I understand what you're saying though


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				Crugers said:
			
		

> I suspect that the replies here are based on incomplete original information and therefore make computation of APR and interest impossible.


 This has always been a big problem with the _CU _- for the most part, both past and present, they can't or won't provide _APR _data for their loans that also takes into account the cost of keeping money on deposit or in shares (as required in most cases) while borrowing. I see that some _CUs _now quote _APRs _on loans but I believe that these still ignore the cost of saving at the same time.


> However IF (note the big if)
> the rate of interest charged by any credit union exceeds the maximum of 1% per month, and
> the credit union knowingly charged or accepted the interest
> then it could be that *the Credit Union would be "...Best for loans...".*
> Why? Because...


 Onlt if they breach the 1% per month (c. 12% _APR_) limit. This still ignores the additional cost of keeping money in shares/on deposit while borrowing and this is never factored into the equation.


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## Murt10

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				vladamir said:
			
		

> would i be correct in saying that credit unions are predominant in working class areas? - where credit was generally unatainable and the 'ould' credit union was an alternative to the money lender?  that said, my credit union is an dawson street!!




I think you may be wrong there. As far as I am aware, most of the biggest CR. unions in the country, with the exception of Mitchelstown CU. (Golden Vale farmers) are occupational Cr. Unions. Smaller, local Cr. Unions on the other hand, who may be bigger in number, but with a much smaller membership and assets, will lend to people who would not otherwise qualify for credit. The banks would laugh at them, or else charge them an arm and a leg. 

Big Cr. Unions that I am aware  of are the Garda (x2), AerRianta/Aer lingus, Health service, RTE and  the Civil service I'm sure that the teachers and local authorities also have their own CU's as well. If these occupational CU's were to ever come together, they would form a very powerful banking force. Part of the reason for their success is that it is possible to have deductions  made at source from your wages and by definition most of the members are working and therefore bad debts should not be as big a problem as might be otherwise the case.

One other thing when comparing rates with other financial institutiuions is that in the event of your death, your debt is written off and the value of your shares are doubled.  There is no charge for this insurance. 

FWIW, I have found the occupational Cr. Union deductions from salary, by far and away, the best way to save, without too much pain. As soon as you get a pay increase, increment, national wage agreement, whatever, you increase your Cr. union subscription at that time and you don't feel any loss as your weekly income doesn't decrease.

Murt


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				Murt10 said:
			
		

> FWIW, I have found the occupational Cr. Union deductions from salary, by far and away, the best way to save, without too much pain. As soon as you get a pay increase, increment, national wage agreement, whatever, you increase your Cr. union subscription at that time and you don't feel any loss as your weekly income doesn't decrease.


It may be the best, or at least a good, approach to enforcing saving discipline on those who otherwise might not have it but it may not be the best way to save as this depends on what the money is going into and what is most appropriate for the individual in question.


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## Crugers

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				Clubman said:
			
		

> _...Onlt if they breach the 1% per month (c. 12% APR) limit..._


Eh! Yes, that's what I said!


			
				Crugers said:
			
		

> _However* IF* (note the big if)..._


My point was that IF anyone believes their credit union is knowingly charging them more than 1% per month interest they should also believe they are entitled (by law) to that loan interest free!


The original incomplete information I referred to was the post by johnnybegood which was incomplete and required clarification and correction (as requested). 


			
				johnnybegood said:
			
		

> ...RIP OFF...
> ...PLEASE SOMEBODY CORRECT ME IF I AM WRONG WITH MY CALCUALTIONS CAUSE THIS JUST SHOCKS ME...
> ...SHAME ON YOU!!!!


Especially as it was so over the top!




			
				Clubman said:
			
		

> I see that some _CUs _now quote _APRs _on loans...


All CU are obliged by law to quote APR's on their Credit Agreements. Do you know of any that don't?
The calculation method of the APR is strictly governed by law. No it does not factor in or take account of _"...the cost of saving at the same time..."._ Like it or loathe it, good or bad, it is the law.
The law also restricts the withdrawal of funds, shares or deposits, while you have a loan. Again, like it or loathe it, good or bad, it is the law.


			
				Clubman(in another thread) said:
			
		

> ...i_t's not a rip-off as long as these prices were clearly displayed *as required by law*..._


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## skydancer

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Nobody seems to take into account the Divedends and the interest rebate  paid back into your account at the end of the year.


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				Crugers said:
			
		

> All CU are obliged by law to quote APR's on their Credit Agreements. Do you know of any that don't?


 If you search/browse back through the previous discussions about CU borrowings you will see several where people (in particular _Brendan _on one specific hunt for information) could not get their _CUs _to quote them _APRs_. Maybe the requirement that _CUs _quote _APRs _on loans is a recent one?


> The calculation method of the APR is strictly governed by law. No it does not factor in or take account of _"...the cost of saving at the same time..."._ Like it or loathe it, good or bad, it is the law.


 My point is that by requiring people to keep money on deposit or in shares while borrowing the _CUs _inflate the cost of borrowing over and above the _APR_ quoted - if any.


> The law also restricts the withdrawal of funds, shares or deposits, while you have a loan. Again, like it or loathe it, good or bad, it is the law.


 You mean the law governing _CUs _specifically?

In relation to my quote about things not being a rip-off if the prices are clearly displayed then in this case, where the cost of borrowing is inflated by the need to keep money on deposit or in shares inflates the cost of borrowing but this is not clearly explained to the borrower, then there certainly is a potential for a rip-off.


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				skydancer said:
			
		

> Nobody seems to take into account the Divedends and the interest rebate  paid back into your account at the end of the year.


They do. But the interest rate rebate usually just discounts the cost of borrowing slightly below the maximum of c. 12%+ _APR _while the dividends payable these days are usually around 3% gross at best and, as such, never going to make up the difference between how much could be saved by simply using the money in shares to reduce the amount that the individual needs to borrow.


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## Crugers

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



> Originally Posted by *Clubman*
> _Maybe the requirement that CUs quote APRs on loans is a recent one?_


Fairly recent, as and from, appropriately enough, Apr1 (2005), all CU's stopped using Promissory Notes for loans and began issuing Credit Agreements in a format approved by IFSRA that must contain the APR calculated in a manner defined by law (which does not refer to shares/deposits).


> Originally Posted by *Clubman*
> _...requiring people to keep money on deposit or in shares while borrowing... _


While some CU's impliment these requirements, it is changing. In the thread about _'the future of Irish CU's'_ Brendan referred to his CU fastracking membership requirements to facilitate loans to members.


> Originally Posted by *Clubman*
> _You mean the law governing CUs specifically?_


Yep! CU Act,1997 as amended...


> Originally Posted by *Clubman*
> _...not clearly explained to the borrower, then there certainly is a potential for a rip-off..._


It can be impossible to clearly explain somethings to some people. Sometimes it is the fault of the sender, sometimes the receiver, sometimes both! However since CU's are not-for-profit organisations I don't see the communication failures as a mechanism set up to rip off members.
The Credit Agreements in CU's have cooling off clauses the same as other financial institutions. They list all the details including APR's, repayment amounts, total cost of credit, number of repayments, start date etc...


> Originally Posted by *Clubman(in another thread)*
> _The fact that somebody doesn't ask/check beforehand means that they cannot claim to have been ripped off after the fact._


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## ClubMan

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				Crugers said:
			
		

> However since CU's are not-for-profit organisations I don't see the communication failures as a mechanism set up to rip off members.


 The co-operative nature (arguably somewhat eroded in recent years) of an organisation such as the _CU _movement is no defence against deliberate or accidental rip-offs. In any case most _CUs_ branches and the _ILCU _employ full time staff so hiding behind amateurism is not on any more. Just look at the ill fated _ILCU _centralised computer system fiasco or the insistence by command central that _CUs _buy insurance through a single provider (which caused a few _CUs _to secede from the _ILCU_)? Or the way in which the _CUs _have colluded for years with members to shield funds from _DIRT _on deposit interest or income tax on dividends? All cases where _CU_ members (including myself) and taxpayers were ripped off to the tune of millions either deliberately or through ineptitude.

I agree that consumers, including _CU _members/customers, have a responsibility to apprise themselves of the details of any agreement that they sign up to. The problem is that even those (such as many _AAM _contributors) who are well averse in matters of personal finance find it difficult or impossible to establish certain facts (such as the effective _APR _on loans taking into account the requirement to keep money in shares/on deposit).


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## Crugers

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



> _...no defence against deliberate or accidental rip-offs..._


Thats right! That's why I expanded on how members could be entitled to interest free loans in those cases where CU's knowingly charge or accept interest at a rate greater that 1% per month.



> _...CUs have colluded for years with members to shield funds from DIRT on deposit interest or income tax on dividends...
> _


CU deposit accounts were not liable to DIRT until January 2002, CU's applied the law and didn't, until then, deduct DIRT. You wouldn't expect them to do otherwise? Now that these accounts are liable to D.I.R.T. it is deducted and remitted to the coffers of the state.
Income tax on dividends was/is the responsibility of the individual member. If a member did/does not declare their dividend they are breaking the law, not the CU.
What would you have CU's do?
Is Ford Motor Company guilty of colluding with speeding motorists in Ford cars? Are Aer Lingus responsible for weekend travellers who over shop in NYC and import without paying duties? 


> _...taxpayers were ripped off to the tune of millions either deliberately or through ineptitude...
> _


Since CU's are not responsible for members tax returns or the accuracy of the declarations made theirin they can hardly be implicated in ripping off taxpayers either deliberately or through ineptitude.
With regards to the centralised computer system I can only agree that it was the most spectacularly inept and expensive cock up that the League had............ to date. (There's optimism for ya! )
Regarding insurance via 'control central'. Yes some CU's with buying power and resources found they could negotiate terms elsewhere. The League objected and lost in court. More CU's found they couldn't get better terms elsewhere and continue to use the services of the League. Market forces prevail!


> _...difficult or impossible to establish certain facts (such as the effective APR on loans taking into account the requirement to keep money in shares/on deposit)..._


Darag has a calculator that allegedly  works out an 'effective APR' at
http://www.geocities.com/dara_gallagher/index.html


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## levelpar

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



			
				johnnybegood said:
			
		

> Hi just enquire about a credit union loan for 2k and this is what they qouted:
> 
> 12 mths (52 weekly payments)
> 
> total payment €45 (split capital €38.46 and balance €6 odd interest)


 

Hi , As a credit union member for many years, I have been charged interest ONLY on the reducing balance. Unless I'm mistaken,you imply the interest is €6 odd every week. Before everyone jumps on the bandwagon in thrashing Credit Unions, remember, years ago when Banks were not so quick to hand out money ,the only recourse ordinary people had to money for holidays,household purchases.etc,was the local credit union where one paid what one could afford and learned to save a little each week WITHOUT all sort of conditions imposed as the banks do. Also if things were tight one week ,no one came to haul you to court or take over your house (like the banks would)..Having said all that , It's my opinion that credit unions have lost their way baa baa baa. Those in charge are wannabe bankers , are not as community friendly as they use to be and now plough profits into bigger and bigger premises with all the trappings of Banks. They even have the cheek to state "no hidden charges". Thanks for nothing . They have forgotten that the credit union is owned by the community and its not us and them which it is beginning to look like.


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## mell61

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

I have to agree with Frando totally.
In the 1980's the banks were a closed shop, lending only to those who didn't need it!    
My family was in a position where we needed a short term loan quickly, my mum and sis both working full time couldn't get a short term loan (as i recall for £500) even though both were in full time employment and had been with the banks for umpteen years.    
I was still in school and was able to walk in and get the money straight away based on my savings!
So for me the CU have been a financial backbone of this country and in many cases funded the Celtic Kitten!    When the downturn comes I suspect there will still be nurturing their customers when the banks are hounding people for money!


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## levelpar

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Hi , Just found News and Views ,Autumn 2005 edition,.Car Loan 6.99% (apr 7.22%).  Likewise Christmas Loans same .   New Household Loans 7.75% (APR 8.03%).  Educational Loans 6.6% (apr 6.80%) They also advertise LIFE SAVINGS INSURANCE  at no extra cost to members and LOAN PROTECTION INSURANCE at no extra cost to members. The rates were up to Dec. 05


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## Froggie

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

The easiest way of looking at the cost of a loan is to compare the actual money repaid. The credit union charges interest on the outstanding loan ballance, and as long as you repay each week it is a great way of getting finance. The Bank on the other hand charge you interest on the full €2000 for the full term of the loan.


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## Brendan Burgess

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

Froggie

That's just nonsense and nonsense which is often put out by the Credit Unions. 

Most lenders, including credit unions, charge interest on a reducing balance basis. But that doesn't matter too much. What matters is the Annual Percentage Rate. This is the standardised way of comparing the costs of loans. You can compare different amounts over different periods using this single standard rate. 

There are some problems with APR, the most significant of which is that the Credit Unions do not factor in the money earning 2% on the share account into the calculation. 

I did not check your interpretation of the original post as I believe that the original poster has got it wrong or his Credit Union has misquoted him

Brendan


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## extopia

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*



Froggie said:


> He's paying €45 per week for 52 weeks (2 Years) so total repaid is €2,340.
> The original loan was €2000 so interest is €340.
> 
> Interest as percentage = (340/2000)x100/2 = 8.5%.



Unfortunately for this calculation, 52 weeks is not 2 years.


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## Froggie

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

extopia,
My mistake, thanks.
I just checked out my local CU web site and got the following.
€2000 borrowed at 6.5%, 52 repayments of €39.83, total repayed is €2071.16.
Thats interest of €71.16 which works out at 3.558% of €2000.
I will say it again, CU charge interest on the outstanding loan balance. I dont think Brendan is correct in saying that most lenders do the same.
Can someone who works in a bank shed some light on this issue?


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## extopia

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

We're going over old ground here. The posts above are clear about why you would use 1,000 rather than 2,000 for a rule-of-thumb calculation such as this. And yes, the standard practice is to charge interest on the outstanding balance, rather than the originally borrowed amount.


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## raindog

*Re: Credit Union --- best for loans --- WHAT A JOKE!!*

just received my health services credit union yearly accounts summary without going into too much detail
personal loans APR 10.4%
car loans   APR  7.2%
and i guess these figures do not include interest rebate.
there could be a case for CU to simplify their loan calculations though.


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## RichInSpirit

*Possible answer to question here*



johnnybegood said:


> Hi just enquire about a credit union loan for 2k and this is what they qouted:
> 
> 12 mths (52 weekly payments)
> 
> total payment €45    (split capital €38.46 and balance €6 odd interest)
> 
> I have prepared this. On that basis the interest is 30%
> 
> *TERM**LOAN**             30%             **       PAID   **      BALANCE**€**               €**               €           **             €*1             2,000                50.00                 195.00               1,855.00 2             1,855                46.38                 195.00               1,706.38 3             1,706                42.66                 195.00               1,554.03 4             1,554                38.85                 195.00               1,397.89 5             1,398                34.95                 195.00               1,237.83 6             1,238                30.95                 195.00               1,073.78 7             1,074                26.84                 195.00                  905.62 8                906                22.64                 195.00                  733.26 9                733                18.33                 195.00                  556.59 10                557                13.91                 195.00                  375.51 11                376                  9.39                 195.00                  189.90 12                190                  4.75                 195.00 -                    0.36
> 
> Am i missing something here how ridiculous is that!!!!
> 
> Same info based on 18 mths works out at 20.5% !!!! RIP OFF
> 
> *TERM**LOAN**20.50%**PAID **BALANCE**€**€**€**€*1             2,000                34.17                 130.00               1,904.17 2             1,904                32.53                 130.00               1,806.70 3             1,807                30.86                 130.00               1,707.56 4             1,708                29.17                 130.00               1,606.73 5             1,607                27.45                 130.00               1,504.18 6             1,504                25.70                 130.00               1,399.88 7             1,400                23.91                 130.00               1,293.79 8             1,294                22.10                 130.00               1,185.89 9             1,186                20.26                 130.00               1,076.15 10             1,076                18.38                 130.00                  964.54 11                965                16.48                 130.00                  851.01 12                851                14.54                 130.00                  735.55 13                736                12.57                 130.00                  618.12 14                618                10.56                 130.00                  498.68 15                499                  8.52                 130.00                  377.20 16                377                  6.44                 130.00                  253.64 17                254                  4.33                 130.00                  127.97 18                128                  2.19                 130.00                      0.16              340.16
> 
> PLEASE SOMEBODY CORRECT ME IF I AM WRONG WITH MY CALCUALTIONS CAUSE THIS JUST SHOCKS ME. the most vunerable of people borrow from the credit union and this is the rates they charge. Then i read in the paper that ifsra have said they are better value for loans then anybody else!!! What a load of BS!!!
> 
> By the way the qoute was provided by west cabra credit union SHAME ON YOU!!!!



I was just browsing here and may have an answer to the op's observation. 

Here goes.  Most lenders quote repayments on a level repayment basis, but historically a credit union may have quoted a level principal figure and the starting interest rate after which the principal payment stays even but the interest decrease every week as the outstanding principal reduces.
I didn't check out the op's figures for this but it could be the case.


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## RichInSpirit

*Figures*

Just trying out the figures now. 
€38.46 x 52 = €1999.92 principal. 
Starting weekly interest €6 
Yearly interest reducing balance €6x52/2 = €156
€156/€2000 is 7.8% interest.


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## ajapale

You realise the last post in the thread is over 5 years old?


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## RichInSpirit

ajapale said:


> You realise the last post in the thread is over 5 years old?



I do.


----------

