Credit Unions- Borrowing

mrstewieo

In the next few months, my partner and I are going to be saving £4000 (this is a definete, as we are moving on April 25th!)

I am considering putting it into a credit union, not for the interest rate - but because I heard of the loan criteria.

Am I correct in the thinking that whatever you have in your credit union, you can borrow double it?

Tixy

The terms vary for each union, you'd have to look into the specific union you are interested in joining. I think some will only loan what you have saved, others insist on belonging for a period of time before you can borrow at all and other wil allow you to borrow quite early if for example you are stuck with payday loans that you can't keep up with.

The loan interest rate for credit unions is not great though - better than a lot of subprime but not competative with mainstream lending (assuming you could get a mainstream loan)

mrstewieo

Tixy wrote: »

The terms vary for each union, you'd have to look into the specific union you are interested in joining. I think some will only loan what you have saved, others insist on belonging for a period of time before you can borrow at all and other wil allow you to borrow quite early if for example you are stuck with payday loans that you can't keep up with.

The loan interest rate for credit unions is not great though - better than a lot of subprime but not competative with mainstream lending (assuming you could get a mainstream loan)

I think some will only loan what you have saved

Do you mean, if I saved £4000, they would only let me borrow £4000 overall??

[Deleted User]

I dont know if others are simlar but the cu i`m a member of doesnt pay interest as such only a dividend if they make a profit in any given year,the lending rate though is quite good at 12.9% apr,so not the best place to save but not a bad place to borrow

griff2010

Hey the way my CU works is that once you have been a member for about 3 months and they see you are a good saver for your first loan they will let you borrow double your savings, After that and they see you pay it back etc they will let you borrow 2 times your money, So say you had 4k they would let you borrow 12k, So keep up your payments for any small loans and let them see you pay back good and they might let you take out a decent loan, I also heard CU's can't charge much more than 1% a month, I know my CU apr is 12.68 which i find good enough as it's better than all the credit cards i have. Hope this helps.

Skint_Lynne

My credit union allows you to borrow double your shares, but you need to be a member for 12 weeks before you can have a loan, and the first one may be less than double your shares (money saved). It just depends on the rules for that particular one.

I would use one of these to borrow before going to a bank. This benefits the community rather than greedy banks lining their pockets. HTH

Tixy

For credit unions the APRs on borrowing are capped at 2% per month (so around 25% APR, but some charge as little as 1% per month (like griff and woodbines ), so again do check it out before you decide which one to join. Most have their own websites which you can find through the ABCUL website and lots display their terms on there.

mrstewieo

Skint_Lynne wrote: »

My credit union allows you to borrow double your shares, but you need to be a member for 12 weeks before you can have a loan, and the first one may be less than double your shares (money saved). It just depends on the rules for that particular one.

I would use one of these to borrow before going to a bank. This benefits the community rather than greedy banks lining their pockets. HTH

Thanks Lynn and Griff.

I'm going to have £4000 saved for deposits, removals, some furniture etc, but I think I will need a little more so even if they can give me a loan of £1000 or £2000 that will be fine.

I've already been a member for 7 months (but no savings going in) and will have £1000 going in each month (including Jan, this month) until May... so fingers crossed!

griff2010

Mrsstew i think in most CU you are only allowed to save a certain amount, I know in mine it is £10000, I dunno why this is but i do know that if anyone dies they get paid out on there deat double there shares along with a 2000 death benefit which is the main reason why i save with the credit union instead of the banks Other CU's may be different though to the limit you are allowed to save.