The Credit Union, your views.

jizba

I've heard a little bit about this establishment over the past number of moths but I am unsure as to what its benefits are when it comes to borrowing and saving.

I have around £5000 that I want to invest until around October, at which time I was planning to take out a loan of up to around £20,000. Is the Credit Union my best bet for this or are there other institutions better equiped for this?

belfastgirl23

The credit union is good for people who might struggle to get credit elsewhere. For interest rates etc you should really check your local credit union, I know someone who borrowed money for a car loan from them since she wanted to invest in her community rather than a big bank - she said the interest rate was competitive with local banks but not the best rate she could have gotten. You would have to be referred to join by one or two current members and interest on savings isn't usually very big. But it's a good idea in principle and well worth supporting IMHO.

weebro

Credit Union sometimes cheaper for loans, interest ok, it used to be under £5000 you did not pay tax on interest, not sure if still that way

LilMissEmmylou

its simple interest so if you pay it off quickly the interest reduces quickly as far as im aware. I dont use it but my mum does and i got her to take out a £3,000 loan for me as it worked out cheaper. I think the way it works is you have to have the money to borrow it and once you have showen you can repay it you can borrow more than what you have and so on and so on

skorpio40

Havnt got many answers for you,,,,but what i can tell you is that you cant just deposit your 5000 pounds and then borrow 20,000 a few months later. It works on a tiered system. Ive been a member more than 15 years and i am allowed to borrow 3 times the amount (plus 1000 pounds) i have in my savings. New members might only be able to borrow something like 2 times the amount of their savings.

The idea behind credit unions are to encourage people in a community to save and borrow against each others "shares". (savings). So you start off saving on a weekly or if you prefer a monthly basis. There is a minimum amount of time before you can actually start borrowing. It maybe three months or so.

Think you have to have paid back half your loan before you can then get a top-up loan if you require it.

Your repayments must include a few pounds into your savings. So as well as your loan decreasing, your savings will be growing.

Dont think you would get anywhere near the interest a bank would pay you on your savings though.

You also pay a small insurance premium when you bororw money (not sure on figures,,,maybe £10 for every £1000 borrowed). This means that should anything happen to you (god forbid) the loan is cleared and i think your beneficiaries may even receive your savings.

Personally i have found it excellent. Much better than dealing with big institutions.

As an "investment" its probably what people might call "pants".