# Top up loan question



## dave29

Hi All.

I've about 1400 in savings and a loan of about 1100 in my credit union. 

I direct debit  €50 a week.. since I opened the account in January. 

I'm going on a holiday ( last minute thing ) in 3 weeks. 

Would I be able to get a top up load of €500 ? 

I've a full time job etc and the direct debit of €50 / week would cover the repayments etc. 

The thing that worries me is I got a loan of 1300 a about 2 months ago for home improvements would there be a problem with a top up load since i only got a load 2 months ago ? 

thanks.


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## Mrs Vimes

Would it not make more sense to withdraw some of your savings for the holiday?

Is it one of the credit unions that say they are in favour of people managing their finances responsibly but then try and ensure all their members are in debt all the time?

In my book (old-fashioned I know), you save up for holidays and then spend your savings on them. I have heard of credit unions which say you should save up and then refuse to allow you to spend your savings, you must borrow instead. They then claim to be responsible.

It really shouldn't annoy me... it really shouldn't.


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## dave29

I would have saved up .. but it was a last minute thing. 

I would rather get a loan then take out my savings.


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## PolkaDot

Take it out of your savings and use the €50 per week to replenish the savings. You'll have it done in 10 weeks. 

If you take out a loan, all you will be doing is repaying it with interest. Makes no sense.


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## dave29

Ya i suppose you guys are right.

Can I just walk in and withdraw the money or do i need to wait a few days ?


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## PolkaDot

Why would you need to wait a few days??

Is your loan a secured loan against your savings? If so, you might need to leave 1100 in your savings.


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## dave29

Are all loans not secured against your savings ? 

I'm not sure how the CU work. I'm only with them since January.


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## PolkaDot

No it is possible to get unsecured loans. But they generally make you do a secured loan first and prove your are reliable and well repay. The €50 per month you currently pay, is that going off the loan or into savings?


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## dave29

€18 - €19 off loan rest into savings.


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## PolkaDot

You should pay €40 per week at least off the loan. I would recommend paying €50 but credit unions like you to keep adding to your savings. You are earning little or no interest on the savings whilst at the same time paying interest on the loan. Get the loan paid off as soon as you can and then put the full €50 into your savings. Build up you savings to a decent level and then dip into it for holidays etc. Then replenish the savings. It is better than taking out loans all the time.


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## dave29

I didn't know i could change the repayment amount. 

I'm leaving for hol's on the 17th.. from now till then there will be 3 more €50 going into the account.

So what i'll do is on the 15th I'll drop in and ask to take money out of my savings and ask them to change my repayment amount to €40/week instead of €18/€19


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## Slim

dave29 said:


> I didn't know i could change the repayment amount.
> 
> I'm leaving for hol's on the 17th.. from now till then there will be 3 more €50 going into the account.
> 
> So what i'll do is on the 15th I'll drop in and ask to take money out of my savings and ask them to change my repayment amount to €40/week instead of €18/€19


 
That's leaving it very close if you have a secured loan, Dave. The most you could take out might be €300 and the paperwork might take longer than you will have. Might be as well to check your existing loan agreement to see if you loan is dependant on leaving a matching amount of savings in the CU (this would be a secured loan). If not, you can withdraw the €500. Pop in and ask what your unattached savings are, if they say about €1100, then your loan is unsecured and you can withdraw what you need. Be aware though that there is a little rule in CUs which is often not enforced that whatever you had in savings at the  time you drew the loan are frozen until loan balance drops below that. Ask at the office.


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## PolkaDot

The credit union can be strange when it comes to loans. Just to give you an example....

I was saving hard with them for the 2nd half of last year. I was intending to buy a car as I was doing a lot of driving in my job and was getting mileage expenses. I went in my CU in Feb this year with €4500 in my account, which I needed for the car.

I decided I'd leave €1500 in the account and take out a secured loan because I have never had a CU loan before and in case I need to get one in the future I thought I'd take one out which I knew I'd easily be able to repay (with the mileage expenses). Basically so that it would look good on my loan history.

I went up to the counter and asked could I withdraw €3000, leave €1500 in my account and borrow €1500 against that. The woman I was dealing with could not get her head around what I was asking. She said _"Why don't you just get a loan for €4500?"_ I said _"Because I don't want a loan of €4500, I've been saving up for a particular purpose and now I'm making a withdrawal for that. I'd like to only borrow €1500 please"_

She more or less got annoyed with me and passed me on to someone else to discuss the loan! The other woman understood what I wanted to do and was fine with that. But she did suggest that when making loan repayments I should always make a small lodgement to savings e.g. €10, just because it looks good on your record for future loans.

The CU like you to have loads sitting in your savings, while you pay interest on a loan. They make money from you that way and they build up their capital.

Be wary of their advice. I think the best thing to do is try to build up your savings, dip in when necessary and replenish with regular savings.


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