credit union

stephy110288

hi,
please can someone explain to me what a credit union is? in terms of lending? i have been on some websites and i just dont understand. am i right in thinking that you save with them and then they give you a loan? but what happens to your savings? confused, help!
thanks

Skint_Lynne

Hiya,

A credit union is similar to a bank, but it belongs to the people in the common bond, ie catchment area.

It does give you loans, but these are attached to the savings you have. They are all similar, but some work in slightly different ways. The one I belong to works like this.

You cannot get a loan until you have belonged to the CU for 12 weeks. Your first loan is a secure loan, eg, if you have saved £100, you can get the same amount out on a loan. Make sure you pay this back on time. Then, you can get double the amount you have saved in a loan, eg, if you have £500 saved, you can get £1000 in a loan, and so on.

My friend belongs to a different one, and she can get treble what she has saved in a loan, eg she can get £1500 if she has £500 saved.

Just go in and ask at your local one, they will explain everything to you in layman's terms. You cannot lift your savings out when you have a loan running.

It's a great thing, I would rather use the credit union than go to the bank any day of the week. HTH.

stephy110288

Thank you for explaining it in english, I understand now

lasshavinfun

Im about to join one aswell, I think they are great.
Small loans and great at helping you save.

stephy110288

Can you start saving with a small amount when you first open your account?

doelani

stephy110288 wrote: »

Can you start saving with a small amount when you first open your account?

Most CU have a set amount they expect you to save each week, mine is £2 a week.

singlehouseholder

some credit unions have access to funds allocated by the govt as "growth funds" which may mean depending on the criteria they set and your personal circumstances, you won't have to save anything before you get a loan, just agree to pay a small amount into savings along with your loan repayments.