Credit Union Loan

Shoestrings

Hi there,

Was wondering if anyone has taken out a Credit Union loan recently? I'm looking for some advice. A few months back i realised i needed around £8500 to get all my finances down to one manageable payment. I have £2300 in my CU savings account, so applied for a £6000 loan. I got the loan paid into my bank no problem 2 months ago & paid £1500 clearing some debt & transferred £4500 back into my CU saving account so i didnt eat into any of the loan. Yesterday i tried to withdraw money from the savings account & they advised that the share account is locked as there is an outstanding loan balance. When i called i was told that they could put the £4500 into a new saving account, but i would not have access to my savings of £2300 until after the loan was paid off as this is locked against the value of the loan.
Im completely confused with this & wondered if anyone else had experienced this. This is basically them giving me my savings plus a £3700 loan that ive to pay off & leaves me a couple grand short of why i needed the money in the first place. They have said its in the terms & conditions. I've asked for my agreement to be sent out so i can check this. I definitely dont remember seeing this when i read over it. Feel so stupid.

Pixie5740

Which credit union is the loan with?

Shoestrings

It's with Glasgow. I just read the agreement & it does actually say it on there. You live & learn:( I'm wondering if i should just pay off the loan in full & apply with my bank now.

SnowTiger

Shoestrings wrote: »

It's with Glasgow. I just read the agreement & it does actually say it on there. You live & learn:( I'm wondering if i should just pay off the loan in full & apply with my bank now.

I guess you have a loan which is secured against your shares in (savings with) the Credit Union.

http://www.glasgowcu.com/wp-content/uploads/2014/04/Secured-Against-Shares-Loan-Terms-and-Conditions-April-2014.pdf:

In signing this agreement you agree that all current and future shares deposited with us up to the value of the outstanding loan are held as security towards payment of the principal sum, interest and expenses which may be due or become due. Glasgow Credit Union reserves the right to transfer funds from any account towards any overdue balance.

Certainly check the agreement when you receive a copy.

I don't know what to suggest. Difficult situation, having £2,300 sat there that you can't spend and effectively making the APR on the loan you have higher.

lynz68

That is how Credit Unions work your savings act as security for the loan and normally can't be touched until the loan is paid off.

iris1957

hi i had one as well thats correct what they told you. same happened to me. if you get a loan, your savings are locked. the only way they will let you access saving is when you have more in your saving than you owe to loan . then you can lift out the extra in savings.

Shoestrings

Thanks for all your help guys.

Morglin

All credit unions operate like that - as soon as your loan drops below your savings, you get access to your savings again.

Your savings offer part security to them.

Lin

ilikewatch

My credit union (Lincolnshire) have 3 options when picking a loan:

Unsecured - no savings pledged against the loan amount.
Saver - full amount of the loan must be matched by savings at all times
Equity - 50% of the loan must be matched by savings at all times

It sounds like you expected an unsecured loan, but actually got an equity loan?

[Deleted User]

I don't understand why you put £4500 into your savings account if the £6000 was to clear your debt?

SnowTiger

ilikewatch wrote: »

My credit union (Lincolnshire) have 3 options when picking a loan:

Unsecured - no savings pledged against the loan amount.
Saver - full amount of the loan must be matched by savings at all times
Equity - 50% of the loan must be matched by savings at all times

It sounds like you expected an unsecured loan, but actually got an equity loan?

Members, effectively, lend money to themselves, presumably paying interest on these loans?