Credit Union-Savings to Loan?

A

annemarief8

Registered User
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I have a 13k loan with my CU but i also have 4k in shares. does it make sense for me to keep it like this?

Am I entitled to go in and ask for my shares to be transferred off my loan, pay the rest of my loan and then start building my shares again?
 
Depends on the CU rules but in general borrowing €13K when you could reduce this to €9K doesn't make sense.
 
In my credit union you can only borrow one third of what you have in savings. You must always have one third of outstanding loan on deposit at all times for the duration of the loan. If this were the case with your credit union you could not do what you propose.
 
Check what rate they are charging in case it's cheaper to take your business elsewhere for a lower rate while not being forced to borrow more than you need to.
 
I know what I would do.

Borrow €9k from another lender, such as Halifax or Tesco.

Then pay this off the the CU loan, and clear the outstanding amount from your credit balance.

Examples:

Halifax €9k over 3 yrs @ 8.5%APR costs €282.90p.m: cost of credit €1,184.44

Tesco €9k over 3 yrs @ 6.9%APR costs €276.78p.m: cost of credit €964.08
 
I understand that the Credit Union Act has a rule that you cannot reduce your shareholding below 1/3rd (?) of any loan outstanding.

However, to get around this, progressive credit unions recommend to their members that they should withdraw almost all their shares before taking out a loan. There is no requirement in the Act that you must have money in shares to get a loan, but once you have a loan and shares, you can't reduce your shareholding below some limit.

The thing to do is to look for a cheaper loan elsewhere for the net amount.

Brendan
 
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