# Getting First Credit Union Loan



## kinglynn

Hi all,

Hoping if someone here could give me their opinion...

I'm 22, working this 2 years since I left college. I take home €370 per week. Live with my OH in our house. He's been unemployed for a year or more so i took care of the mortgage and weekly shopping, heating and esb bills. A couple of weeks ago my OH got a new job. Now he needs our car so I have decided it would be best to buy another one. I want a decent car and was looking at a one around the €10k mark.

Now, I used to have alot of savings in the Credit Union. When we were moving into our house I used the majority of it (around €8000) I'd have about €1,500 left. I havent been a regular saver in the Credit Union since. Since christmas i have started saving each week via an Online AIB savers account with our joint account. 

My question is how hard would it be for me to go to the credit union and get a loan for €10,000? I know every Credit union is independantly run but Would they run me outta the building? My dad has all his business there - would it make any difference if he went guarantor?

What (in your opinion) would be the likelihood of been accepted for a loan of €10,000 with only approx €1,500 savings in my share account? Would they need to have you saving regularly beforehand?

Any advise, opinions or previous experience would be appreciated.


----------



## PaddyBloggit

Rule of thumb is that they usually give 4 times your savings but your savings is locked in when you take out the loan.

Going by this they may give you €6k but they will look at your account/membership history before deciding.


----------



## doubledeb

I think a lot depends on your history, judging by your post you have a good record of saving with them. I know that our local CU ask for payslips and outgoings now before offering anything, some CU's will give you more than the 4 times your savings if you have a good record with them..


----------



## kinglynn

Been a member since I was a baby. Alot of savings over the years but as I said most of this was withdrawn over the past 3 years - in fact over the last 3 years its been all withdrawls and no savings.


----------



## doubledeb

Start putting something in every week say for the amount that you will have to pay back each week, ie if your repayments will be €60 per week put in that amount for about 12 weeks (if you can wait that long). They will need to be sure that you can make the repayments each week.  maybe try for 10k and if they refuse that you could maybe think about getting a cheaper car, I know a lot of used car sales people would bite your hand off if you came looking for a used car with cash in your hand, haggle all you can! Have you borrowed anything from them before?


----------



## ontour

Bring in a printout of the savings you having been putting in your AIB account as evidence that you have an excess of income over expenditure.  Proving that you have the financial means and that you are organised and pragmatic with budgeting usually influences credit unions lending decisions significantly.


----------



## kinglynn

Unfortuntely I would need a loan within the next few weeks.


----------



## doubledeb

Ring them and put it to them, you'd never know.  If you were refused your Dad could get a loan for you and you could pay him back like you would a CU?.  I know its not ideal but if you were really stuck it might be an option for you.


----------



## fizzelina

I know a person who had €2k savings and borrowed €14k as one of the parents went guarantor and she could show she was able to afford the repayments. All depends on credit union - give your AIB statement showing monthly savings, your payslips and offer a guarantor and see how you get on. Personally I would buy a cheaper car, like doubledeb says cash is king so haggle with the used car garage.


----------



## kinglynn

My AIB savings are complicated:
I was transfering €150 per week into an online account and then using €450/€500 of it to pay my OH's mortgage. He wasnt working then but he is now. I also have €1,000 savings at home (yes i know saving in a jar isnt the most clever or lucrative).
I've done my homework and I will be able to afford the repayments no bother but I don't know if I will be able to show that on paper...


----------



## doubledeb

What about your OH in all of this?, would he be able to get the loan or pay towards it or better still.... get the bus?
After all you did help him out when he needed it?


----------



## kinglynn

No, i want this to be MY car. He's bought every car we've had over the last 6 years, he still has a year left on the last car he bought. I want to take the leap this time!! He was unemployed for 1.5 years and only after getting a new job so he has zero savings and wouldnt be a prime candidate for a loan. 
Yes i did help him out when it was needed, something I done without thinking and would do it again if he became unemployed in the morning. I have done my sums on this scenerio also, and if he was to become unemployed i would still be able to afford repayments around €60 per week.


----------



## doubledeb

I think the only other option for you would be to ring the CU see what they say and ask them how much you could apply for?
Then depending on what the CU say you mite have to get a cheaper car so all may not be lost...


----------



## kinglynn

I'll ring tomorrow and see what they say.....

Now, what'll i say to them! 
I've never applied for a loan before and to tell ya's the truth i'm so nervous and  petrified!!


----------



## MANTO

Hi There, 

The rules of most CU's have changed significantly over the last year. The financial regulator issued new guidelines to CU's Lending Policies. 

The main criteria now is no longer the ratio of shares / loan but rather the ability to repay.

The ratio of shares / loan is no londer a competent policy as you may have €5000 saved - require €10000 but with your other outgoings you may not have the ability to repay.

I am on a board of directors for an Industrial / Commercial CU and we have declined loans to members regardless of their regular savings due to mortgage / credit card & loan repayments to other institutions & regardless of previous loans taken and repaid. 

On the other hand we have approved loans we would not have before because the individual has _proven the ability to repay._

Auditors also no londer concentrate on the loan / share ratio. Not to say its not a factor as realisticly you cannot lend €10000 to somebody who has only saved €500.

Do not be nervious in the slightest. The ethos of the CU is to HELP members of the CU / Community.

_*Once you can prove the ability to repay*_ - be honest about your current circumstances and provide the requested documentation you should be ok. 

One last thing, they will want to see that by repaying this loan, you are not leaving yourself in finacial difficulty going forward i.e. You can repay the loan but are left with nothing to live on week by week. 

From the Financial Regulators Guidelines:

*Credit Committee​*_The credit committee considers and makes decisions on applications for credit __within the framework and policies established by the board of directors. _

_The credit committee should inquire into the character and financial circumstances of an applicant for credit and security offered, if any, in order to ascertain the applicant’s _*ability to repay a loan in accordance with its terms and determine *_whether the loan is for a provident and productive purpose. _

_The principal risk __to a credit union is ‘bad lending’ with resulting high loan delinquency and writeoff._

_As a governance mechanism, strict guidelines for loan approval should be_
_established and rigorously adhered to._​


----------



## dmos87

Hi KingLynn,

Firstly, get that 1000 cash you have in change jars at home converted to notes and lodge it with the CU. Then apply for the loan. They approx lend 4 times what you have saved, and with 2,500 in the account you should be able to cover the loan. Also offer your dad as a guarantor (if he is willing - nice dad  ) and you should be able to get the loan, I would be surprised if you didnt.


----------



## demoivre

There are alternatives to borrowing from the credit union. You could try and get a term loan from your bank or you could lease the car.


----------



## doubledeb

The interest rates in the bank at the moment are scary, was recently quoted 11% on 6k, so with an 8% int rate in the CU they seem to be your best bet. Also if you fall on hard times the CU seem to understand and will work with you. Banks on the other hand... different story....


----------



## dmos87

This is a girl who clearly has her stuff together - she is 22 with a mortgage and is debt free otherwise. The CU is her best option right now and as she has a strong history with them it should not be a problem as long as she can prove she can afford the repayments.


----------



## redbhoy

You could get a decent enough car for a lot less than 10K. Make sure you look at how much the tax will cost you also. Some cars are as low as 154 per year as far as I remember.


----------



## niceoneted

The way I read it is that she is living with her boyfriend who has the mortgage and she has been paying it while he has been out of work. 
Op there is plenty of good value out there with regards to cars so why stretch yourself to the 10k. Have a look around at cars and prices and work from there. 
If a car is not a necessity and just needed for the evenings/weekends you surely can get buy on something cheaper.


----------



## kinglynn

I was looking at a 07 Skoda Octavia in a Skoda Dealership (which i know is gonna be more expensive but was only having a nosey and a test drive) - they were looking €11,250, so probably talking €10,500 or possibly less. With them the 08 models (which there is a big demand for at the minute) with the lower tax could be €13-14k. It works out less to get the 07 model and pay the higher tax than repay the higher loan for the 08 car.

Now I've rang a garage friend of mine and he said he might be able to get me a 07 for €8 or €9k, he'll have to see if he can get his hands on it though!

Its that type of a car I want (Saloon, 1.9 Diesel) and I've done my homework on price, tax & insurance.


----------



## niceoneted

Fair play to you. You seem to have your head well screwed on at such a young age well done.


----------



## kinglynn

niceoneted said:


> The way I read it is that she is living with her boyfriend who has the mortgage and she has been paying it while he has been out of work.
> Op there is plenty of good value out there with regards to cars so why stretch yourself to the 10k. Have a look around at cars and prices and work from there.
> If a car is not a necessity and just needed for the evenings/weekends you surely can get buy on something cheaper.



Yeah it's his mortgage but its OUR house if you know what I mean. Yes its his name on it but we built it. (I was in college when it was started being built) Most of my CU savings went into kitting out the interior of the house and I've paid for it for the last 9 months. Ive my heart set on a Skoda Octavia (well being honest I've my heart set on a BMW or Audi, but hey lets be realistic!) but I suppose that all depends on what the CU have to say!!


----------



## Oilean Beag

Other posters here are right you do seem to be well organised with your finances however I think it is worth expressing a note of caution - if the house you are living in is in your boyfriend's name and the mortgage is in his name then it is not legally speaking "your" house.

Life isn't all black and white but it is worth thinking about how you can protect your investment in the property i.e. getting you name on the title if not on the mortgage aswell.


----------



## kinglynn

I knew someone would mention this!! ha ha ha
I know legally speaking that I have no interest in the house at all. I've been with himself for 6 years at this stage and we both regard the house as OUR house. He paid every mortgage installment until he became unemployed and then I took over, its no biggie. Sure it'll be half mine when we say "I Do" ha ha ha.


----------



## fizzelina

kinglynn said:


> I knew someone would mention this!! ha ha ha
> .


It's always funny until it happens. Well anyway you seem very sure so hopefully it will never be an issue.


----------



## BONDGIRL

I would get a car for 6k max if I was you. Great value on cars.. spent rest on a holiday haha


----------



## kinglynn

No, i'd rather a 10K car than a 3k holiday....


----------

