# loan and payments barely dropped



## gavincork (7 Jun 2013)

Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.


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## Gerry Canning (7 Jun 2013)

gavincork said:


> Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.


..................................
It seems to be (odd) the way Credit Unions account for lump sums.

Should be easy to sort by asking them. 
It is probably that the system only recognises interest; so the (loan) appears to (need) the 26. 

Call in and I am sure they will sort.


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## Crugers (7 Jun 2013)

gavincork said:


> Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.


Presuming that all payments were up to date the lump sum payment (€5k) would have been applied agains the remaining principal.
That would mean the loan term has reduced by 5/6ths.
The change in repayment is likely due to the interest due per repayment, now based on a loan balance of < €1k whereas before it was on a loan balance >€5k.

If you supplied more information original term, fixed or variable repayment, remaining principal balance, interest rate - a more accurate answer could be given.
HTH


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## Brendan Burgess (7 Jun 2013)

Hi Crugers

When someone pays a lump sum off a mortgage, they are asked if they would like to reduce the repayment amount or the term.

Do the CUs offer this choice for loans which are on schedule?


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## Crugers (8 Jun 2013)

Brendan Burgess said:


> When someone pays a lump sum off a mortgage, they are asked if they would like to reduce the repayment amount or the term.
> 
> Do the CUs offer this choice for loans which are on schedule?



If a member specifically wanted to change the repayment value and leave the term as is - it would be best to create a new credit agreement with amended agreed terms.

After a lump sum payment the loan "status" would technically be "in  advance". So it would be possible to reduce the repayments and not be  "in arrears". However that could be a situation where the CU could argue  that you are NOT sticking to your original agreed repayment and in some  cases that would be correct and appropriate.


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## MC D (8 Jun 2013)

*yiu*

I know that in the credit union union of which i am a member you would be given a choice of what you would want your new payment to be after making a lump sum lodgment. So for e.g it it was your family member who are now 5000 prepaid they would be asked how soon do they want to repay the remaining €1k  if they want to keep to the original agreement the repayments would be a lot less however the member may wish to repay the loan faster therefor the reduction might not be as great.Don't know if i have explained myself very well with this post so apologies if i haven't.


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