Bank Manager
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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
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
vladamir said:that said, my credit union is an dawson street!!
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.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
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?Remember credit unions are supposed to be a non profit organization.
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?
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.Crugers said:I suspect that the replies here are based on incomplete original information and therefore make computation of APR and interest impossible.
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.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...
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!!
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.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.
Eh! Yes, that's what I said!Clubman said:...Onlt if they breach the 1% per month (c. 12% APR) limit...
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!Crugers said:However IF (note the big if)...
Especially as it was so over the top!johnnybegood said:...RIP OFF...
...PLEASE SOMEBODY CORRECT ME IF I AM WRONG WITH MY CALCUALTIONS CAUSE THIS JUST SHOCKS ME...
...SHAME ON YOU!!!!
All CU are obliged by law to quote APR's on their Credit Agreements. Do you know of any that don't?Clubman said:I see that some CUs now quote APRs on loans...
Clubman(in another thread) said:...it's not a rip-off as long as these prices were clearly displayed as required by law...
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?Crugers said:All CU are obliged by law to quote APR's on their Credit Agreements. Do you know of any that don't?
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 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.
You mean the law governing CUs specifically?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.
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