Credit Union: Waste of time!

[Deleted User]

Has anybody else has a bad experience with credit unions?

I have always heard good things about credit unions, and decided to join 1 around 5 years ago.

I didn't need a loan at the time I joined, so just decided to save a little, being £10 a month (The minimum amount they require).

Around 5/6 months later, I applied for a loan. It stated that, you can apply for a loan if you receive more than £100 a week in benefits. I did at the time, as it was about £106. So the woman said that was fine.

Asked me what my weekly outgoings were and I told her. She then looked at my application and said to me, "there is no way you will be approved for a loan if that's all you have left off your benefit" Being honest, I can't remember at the time how much I had left!

I think it was something like £13 a week had to be paid back off the loan. Anyway, a week later and I got a letter turning me down. It said that, I may apply again after "saving" for another 3/4 months with them. I actually got annoyed by this, withdrew the savings I had with them and closed my account.

Fast forward a few years to around 16 month ago. Decided to rejoin again, as my Benefit amount had went up, and I wanted to be able to apply for a loan in case I had to. So, I have been paying £15 a month into my account ever since. I have though made 3 withdraws during this time, which have been no problem.

Last Thursday, went in to apply for a loan. However, this time instead of being told I don't have enough income to get a loan, I was told that, I get more than enough money a month and won't get a loan! I couldn't believe it. When I told her I get, ESA, DLA and carers allowance she said, you wont get a loan if your getting all of that. Anyway, got my rejection letter today from them. I never had time to phone them up, but I shall be closing my account again with them tomorrow.

Might sound harsh but, why should I pay money into an account with them each month, just so other people can get loans from them and I can't? They even have a big poster up on their shop window boasting about having a £1.5 Million pot for its members!.

Anybody else had a bad experience?

[Deleted User]

So basically if you got no money you can't get a loan from them and if you have money you can't either as you have money. Does indeed sound like a pointless scheme.

ReadingTim

It sounds like you have been turned down either because what you want to borrow is massively larger than the amount you can repay every month and/or your ability to repay is based on receipt of benefits which in this age of austerity, aren't a very certain/reliable source of income for the future.

This is not a slur on you or your character, merely the circumstances in which you are in - the credit union does not think it will get its money back. If you think you can afford the loan, why haven't you saved up the amount already? The fact you haven't saved up (over a period of several years) means you're unlikely to repay a loan if you were given one.

If you want an organisation to give money to someone who lacks the ability to repay it, you're not looking for a credit union; you're looking for a charity.

Anthorn

Re. the OP: Your experience is not my experience. Judging solely from the contents of your post it appears that you want(ed) a loan but didn't/don't see why you should prove that you can afford it and can afford to pay it back.


Looking at Rainbow Saver Anglia Credit Union Ltd which I support which is expected to merge into Eastern Savings and Loans Credit Union Ltd next year, those with a a good credit history (Experian) can expect a starter loan of £500 at 0.5% interest per month, around 12% APR. Other loans are Child Benefit Loans where Child Benefit is paid into the Union and pays back the loan and accrues a lump sum in savings. Then there are a limited number of Free interest loans for heating oil for those who need it. Overall a pretty good service even for those with a bank account and credit card.


I haven't even touched on savings, in which no interest is paid and the profits are distributed amongst members (savers and borrowers) usually after the AGM where such things are decided by voting.


Credit Unions are sometimes supported in the local area by entities such as the Local Authority, banks such as Lloyds and Barclays, housing association and employers.
[URL]http://[/URL]www.rainbowsaver.co.uk
http://www.eslcu.co.uk/

jonesMUFCforever

OP you started to save £15 with the credit union but made 3 withdrawals - how would you have made the repayments on a loan?

Fireflyaway

Maybe its to do with your history? If you have already made 3 withdrawals maybe they think if you need the money back, how would you keep loan repayments? I think my credit union only allows 2 withdrawals in 6 months to be considered for a loan.

SnowTiger

Credit Unions seem to go bust on a regular basis. The one in my nearest (postal) town went bust a few years ago. My (now) nearest one has just gone bust too.

And they tend to be geared more to lending than saving. Perhaps they explains why they go bust.

meer53

Sounds like a responsible lender to me.

[Deleted User]

SnowTiger wrote: »

Credit Unions seem to go bust on a regular basis. The one in my nearest (postal) town went bust a few years ago. My (now) nearest one has just gone bust too.

And they tend to be geared more to lending than saving. Perhaps they explains why they go bust.

in my experience they tend to merge,but even if they do go bust you are protected by the FSCS,they may not be perfect but a far better option than wonga et al

Anthorn

SnowTiger wrote: »

Credit Unions seem to go bust on a regular basis. The one in my nearest (postal) town went bust a few years ago. My (now) nearest one has just gone bust too.

And they tend to be geared more to lending than saving. Perhaps they explains why they go bust.

Credit Unions cannot possibly be more geared more to lending than to saving because it's from saving that their money comes from to lend. However it's loans that they devote most of their information to since there is often not a lot to be said about saving but several types of loans need to be explained.


It's also pretty much given that those who don't save will find getting a loan more difficult although not impossible.

antrobus

woodbine wrote: »

in my experience they tend to merge,but even if they do go bust you are protected by the FSCS,they may not be perfect but a far better option than wonga et al

Nevertheless, they do go bust on a regular basis.

Five went bust in 2014, eight in 2013. None so far this year, which might turn out to be a good year.

http://www.fscs.org.uk/industry/sub-schemes/accepting-deposits/deposit-defaults/