Credit Unions offering loans at just 1%

Candy_2

Hi I am a volunteer at my local Credit Union and they are brilliant. They offer low cost loans at just 1% on a decreasing balance. What's the catch i hear you say. There isn't one. Credit Union's are based all over the country and have been going for years. They are voluntary run by members for the members. All you need to join is two forms of I.D and £1 membership. It does not matter if you are working or not, anyone can join, even child savers.
Want to no more feel free to ask and i will do my best to answer any of your questions.

P.s I have been with credit union for years and used them to obtain loans and pay of my debts which charge a higher interest rate, saving me a fortune.

ManAtHome

Obviously much better idea than doorstep lenders (even banks by the sound of it..!).

Where do the funds come from - is it just the members chipping in, presumably little or no interest paid. Just interested in how you balance low rates with the amount of cash you need to pull in before you can lend it out.

j-baby-scotland

I joined the Credit Union when they opened a branch local to me just under a year ago.
The APR is 12.7% on mine, equating to the 1% per month the original poster quotes.

Candy_2

I am sorry to hear about your difficultie with your credit union, but i have never heard of that one before, all credit union's charge only 1%. I would question it with the credit union commitee or the FSA?

Candy_2

The funds come various locations, E.g Regional Development agency, co-op, neighbourhood renewal unit and more. If you would like to visit the kfcu website the address is: https://www.kfcu.org.uk The sight will give you plenty of information and advice and tell you where your local kfcu is? you can also email them on: admin@kfcu.org.uk. Hope this helps.

j-baby-scotland

Candy wrote:

I am sorry to hear about your difficultie with your credit union, but i have never heard of that one before, all credit union's charge only 1%. I would question it with the credit union commitee or the FSA?

I have no difficulty with my credit union... your figure of 1% on the reducing balance monthly equates to 12.68% (12.7% rounded up) annually, as an APR.

You quote the 1% which is monthly, as my credit union is, but this is not annually.

Bossyboots

j-baby-scotland wrote:

I have no difficulty with my credit union... your figure of 1% on the reducing balance monthly equates to 12.68% (12.7% rounded up) annually, as an APR.

You quote the 1% which is monthly, as my credit union is, but this is not annually.

12.68% is the quoted APR rate on the website the OP has linked to in its page about credit unions which as j-baby correctly states is 1% per month. This figure is the maximum chargeable.

ASG_2

Under legislation passed in June 2006, the maximum amount of interest which a credit union can charge is 2% per month. In practice many smaller credit unions have kept their rate at 12.68% APR

Re where does the money come from;

A credit union is a financial co-operative. Members save to create a pool of money. Loans are then made from this pool of money. After expenses and running costs are deducted, any surplus is returned to the members as a dividend.

Usually, the amount you can borrow is dependent upon the amount you have saved and you have to have saved regularly for a minimum period, usually 8 or 12 weeks, before you can have a loan.

Unlike many savings accounts there is no minimum deposit. Many credit unions now offer the facility to have benefits paid through them, making it easier to save whilst on a low income.

The main professional body for credit unions in the UK, who will also be able to tell you where your nearest credit union is is ABCUL (Association of British Credit Unions Ltd) https://www.abcul.coop

I am employed by a credit union and, like OP, would be happy to help if anyone needs it.

j-baby-scotland

Credit Unions are a superb resource.

BoingBoing_2

sounds great, but there's not 1 near me

Glad

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere (please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].