# Clearing a Credit Union Loan with equivalent value in Shares



## quadrangle (21 Jun 2013)

I have a car loan costing €50 per week to service and there are just under 3 years left on the loan. 

I have reached a point where there is €6000 approx remaining to be paid off the loan and I have roughly the same amount in savings. Should I continue to pay my €50 a week (€2500 or so per annum) or should I use my savings/shares to clear the loan??

I have cleared about 5 loans at this point ranging from €5000 to €35,000 over the last 10 years. Would it be detrimental to getting a future loan if I cleared my savings balance. 

I suppose if I cleared the loan and saved the equivalent repayments, I would replenish my savings within a couple of years anyway. Is there any possibility that the next three years of interest payments (currently around a tenner per €50 repayment) would be cleared if the loan was paid off early?


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## vandriver (21 Jun 2013)

Interest is charged per day on the outstanding balance.So if you go in next week,you just need to pay the outstanding €10 or so in interest,transfer your shares(probably accruing almost zero interest),and the loan is finished.
Why not then set up a DD  for the €50 weekly to build back up your shares.


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## Time (21 Jun 2013)

They won't like you doing that. They will try to stop you stating that you won't be able to apply for further loans etc.


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## Brendan Burgess (21 Jun 2013)

Time said:


> They won't like you doing that. They will try to stop you stating that you won't be able to apply for further loans etc.



It depends on the Credit Union.

Some encourgage financial suicide amongst their members by encouraging them to take out loans instead of withdrawing their savings.

But some do act in the interests of their members. 

Keeping €6,000 on deposit at 1%, while borrowing €6,000 at 9% is costing you €500 per year. You should use your shares to pay off your loans.

if the CU tries to dissuade you, let us know.

Given your record, you should have no problem in borrowing again.


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## MC D (22 Jun 2013)

They don't have a share guaranteed loan rate by any chance? The credit union of which I am member has a rate of 4.5% for share guaranteed loans.


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## vandriver (22 Jun 2013)

empty wallet said:


> They don't have a share guaranteed loan rate by any chance? The credit union of which I am member has a rate of 4.5% for share guaranteed loans.


Or to put it another way,they are charging you 4% to borrow your own money.


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## quadrangle (8 Oct 2013)

Decision made. I am clearing my loan, subject to their consent. It will also mean one less payment leaving my bank account, which has its own advantages. Thanks for the advice.


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