Credit Union: Waste of time!

Thrugelmir

Deleted_User wrote: »

So if my washer breaks down and I ask for a £200 loan to replace it, but they refuse and tell me to use my savings instead then I would be back to square one. What if my freezer then breaks down the week after.

That's a different scenario.

Why someone would wish to borrow when they've savings doesn't make financial sense.

Anthorn

Thrugelmir wrote: »

That's a different scenario.

Why someone would wish to borrow when they've savings doesn't make financial sense.

Actually it does make financial sense if someone is saving for something specific such as Christmas, One can get a loan or spend the savings and cancel Christmas.

[Deleted User]

Thrugelmir wrote: »

That's a different scenario.

Why someone would wish to borrow when they've savings doesn't make financial sense.

The local credit union uses a £200 loan as a example in it's advertising e.g borrow £200 and pay back £8.06 over 26 weeks or £4.21 over 52 weeks.

Paying £4.21 could be affordable to pay back a week rather than £200 in one go and leaving yourself with no money whatsoever.

SnowTiger

Thrugelmir wrote: »

That's a different scenario.

Why someone would wish to borrow when they've savings doesn't make financial sense.

Yes, paying 42%+ interest on a £200 loan when you have £200 in an account not earning any interest doesn't make sense.

Well, any financial sense.

I guess the theory is to get people in to the mindset of saving. Many people, even in a rich countries such as the UK, still live hand to mouth. Not always because of lack of income.

Anthorn

SnowTiger wrote: »

Yes, paying 42%+ interest on a £200 loan when you have £200 in an account not earning any interest doesn't make sense.

Well, any financial sense.

I guess the theory is to get people in to the mindset of saving. Many people, even in a rich countries such as the UK, still live hand to mouth. Not always because of lack of income.

It makes sense to the credit union and to me: By combining savings and loans which is in fact done all over the world, pricipally in America, the loan can be repaid while at the same time building a significant lump sum.


However there is an area where I agree with you: Due to the actions of the Credit Union Expansion Project steering committee the ceiling on monthly loan interest was increased from 2% to 3%. At the same time they were complaining that some credit unions are capital rich and don't have enough borrowers: If loans are made more expensive the number of borrowers is likely to fall defeating the object of capital rich CUs providing more loans.

CLAPTON

Anthorn wrote: »

Actually it does make financial sense if someone is saving for something specific such as Christmas, One can get a loan or spend the savings and cancel Christmas.

one can use the saving for the immediate need
and then get a loan later for christmas thus saving interest

Anthorn

CLAPTON wrote: »

one can use the saving for the immediate need
and then get a loan later for christmas thus saving interest

Hey I'll suggest that at the next AGM just to see how many people shoot me down lol


But if there is no savings when the loan is being repaid where is the security for the loan to come from?


Hey I like you. You make me smile.

AlexBolton

I have used them in the past and they are helpful to an extent, but to be honest I would suggest that they are only really relevant to those that are massively in need of them. As much as they still have a place in society for others they are primarily set up to help out those that cannot afford large repayment amounts and those that are vulnerable to fall into the traps of loan sharks or lenders such as Wonga who prey on those who stack up loans and can't make the repayments eventually. The way that it works with credit unions is that they make sure those that borrow are responsible and will pay it back rather than driving them into ridiculous amounts of debt and heartache.

You should only seek credit union help if you really need it and feel that you cannot manage your money correctly, as they will often help you and advice you much better than high street lenders would.

[Deleted User]

antrobus wrote: »

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/

and as i clearly said they are protected by the fscs and i suspect that few if any members have 85k on deposit with a credit union as they don't pay interest just share profits if they make any,i suspect a small number do go bust as they are mainly run on a voluntary basis as mutual organisations

[Deleted User]

Deleted_User wrote: »

Thats what I'm saying. I am employed but not entitled to tax credits or child benefits, so they won't lend to me as I don't have what they think as "secure income". Even if I saved a couple of hundred with them first.

So if my washer breaks down and I ask for a £200 loan to replace it, but they refuse and tell me to use my savings instead then I would be back to square one. What if my freezer then breaks down the week after.

And just because I'm not entitled to benefits, it doesn't mean I am well off. It just means the welfare system only caters to those with kids or those who can't/won't work.

you can get a washer for £149 from currys or £159 from argos or a reconditioned one for £100,our recon washer cost £80 delivered and installed 6 years ago