Use savings or take out loan to buy a car?

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taraking

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I’m looking for advice on a credit union loan please.

I currently have a secured loan with my local CU for €4000. The balance is €200. I have savings of €8000. I am paying €60pw between loan & savings majority of it going on the loan.

I need to change my car and I’m wondering should I borrow the money from CU. Or take the money out of my savings? My income is OAP.. no other income or savings. I’ve been told I’m crazy paying interest on a loan using my own savings ( hope this makes sense)

I’m a member for 4 years & never missed a payment so clean record. I would appreciate any advice please n thanks
 
It doesn’t make sense to be paying interest on a loan when you have sufficient savings. In the case of credit unions what you need to look at,
1. Insurance - do you need insurance cover and if so has your credit union got cover in place? Credit Union policies can sometimes be based on the amount saved at a particular age so you will need to ask at the office.
2. Does your credit union pay Death Benefit Insurance ? This is a separate lump sum payable towards the cost of a members funeral, if your credit union has Death Benefit Insurance they will have a minimum savings balance to avail of this cover, depending on your circumstances it might be beneficial to ensure that you have the minimum balance.
3. Does your credit union pay a dividend (interest) on your savings and if so how much, while this is likely to be a lot less than the loan interest it would offset some of the cost.
4. Do you need to keep savings in place? This is a personal choice but as you pay 60 euro per week you would save over 3k per annum which would replenish your savings fairly quickly.

Hope this helps
 
CUJimmy said:
It doesn’t make sense to be paying interest on a loan when you have sufficient savings. In the case of credit unions what you need to look at,
1. Insurance - do you need insurance cover and if so has your credit union got cover in place? Credit Union policies can sometimes be based on the amount saved at a particular age so you will need to ask at the office.
2. Does your credit union pay Death Benefit Insurance ? This is a separate lump sum payable towards the cost of a members funeral, if your credit union has Death Benefit Insurance they will have a minimum savings balance to avail of this cover, depending on your circumstances it might be beneficial to ensure that you have the minimum balance.
3. Does your credit union pay a dividend (interest) on your savings and if so how much, while this is likely to be a lot less than the loan interest it would offset some of the cost.
4. Do you need to keep savings in place? This is a personal choice but as you pay 60 euro per week you would save over 3k per annum which would replenish your savings fairly quickly.

Hope this helps
Click to expand...
Thank you so much Jimmy for taking the time to respond. I will ask the questions you put forward as IDK any of the answers. I will also use my savings to get the car & built it up again. Thanks again I appreciate your help.
 
CUJimmy said:
4. Do you need to keep savings in place? This is a personal choice but as you pay 60 euro per week you would save over 3k per annum which would replenish your savings fairly quickly.
Click to expand...
Key point. Your good ability to save will serve you well here.
 
If you take money from your savings there is an issue on your life insurance policy on your savings.

Ask the question if you die will your nominated person received life insurance on your savings over the last number of years you have held money in your account. There is a scheme and many of the staff do not know about it but if you die you will receive 50% or a percentage on top of your savings and as you get older there is a sliding scale but it all adds up. I know with the Progessive Credit Union they have one you pay yearly but the existing one that was in place the last 40years is still there. They never mention the old scheme that is still there.
The League of Credit Unions would inform you better on this.

I know my mother was advised to close her account in one cu and open another (due to moving)which was incorrect as she would loose her insurance. I had to get onto the old and new to remind them of it!! Her account and history was transferred over. This can make a difference to your nominated person. She now always gets a loan within shares or just above. She never takes money from her savings/shares.

Also I know of a person who got a CU loan and loan insurance but then died soon after. The CU did not raise the insurance in time and they wanted to take the loan balance from the shares. Family did not allow it to be paid out of shares. CU could do nothing about it.

CUJimmy I did not see your post about the life insurance so apologies for repeating.
 
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taraking said:
Thank you so much Jimmy for taking the time to respond. I will ask the questions you put forward as IDK any of the answers. I will also use my savings to get the car & built it up again. Thanks again I appreciate your help.
Click to expand...

CUJimmy said:
It doesn’t make sense to be paying interest on a loan when you have sufficient savings. In the case of credit unions what you need to look at,
1. Insurance - do you need insurance cover and if so has your credit union got cover in place? Credit Union policies can sometimes be based on the amount saved at a particular age so you will need to ask at the office.
2. Does your credit union pay Death Benefit Insurance ? This is a separate lump sum payable towards the cost of a members funeral, if your credit union has Death Benefit Insurance they will have a minimum savings balance to avail of this cover, depending on your circumstances it might be beneficial to ensure that you have the minimum balance.
3. Does your credit union pay a dividend (interest) on your savings and if so how much, while this is likely to be a lot less than the loan interest it would offset some of the cost.
4. Do you need to keep savings in place? This is a personal choice but as you pay 60 euro per week you would save over 3k per annum which would replenish your savings fairly quickly.

Hope this helps
Click to expand...
CU Jimmy I asked the questions you posted.
1 yes CU has insurance in place
2 CU pay death penalty of €1000 to cover cost of funeral expenses.
3 The minimum balance is €200
4CU Does pay a dividend but not every year
5 You need to keep minimum of €210 in your a/c.
Also his advice to me was take half the amount I am paying for the car out of my savings & the the half as a loan…
( see answers 3 & 5 that confused me ) but I felt rushed on the phone! Thank you
 
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