Credit Union Loans?

A_A_Mole

I'd quite like a loan to consolidate my credit card debt to reduce the amount of interest I'm paying.

I have a credit union in my area that offers loans with 10 to 12 % APR on the amount I would like to borrow.

Does anyone know how likely credit unions are to give a loan, compared to a bank?

I see they want read only access to my bank account. Any thing that would be a red flag?

Any downsides of this type of loan or service?

Thank you.

jonesMUFCforever

I think you would need to save with them first before they will lend to you.

Credit Unions do not have cash reserves as much as banks for bad debts so you need to show that you can save first.

donnac2558

Yes, you need to save with them for a while, then usually take a few small loans and pay them off.



You become a member of a credit union, the one I am with you pay £1 per year fee to be a member it is taken out of your savings. If you want to borrow over a certain amount £10,000 in my one they have to do checks. I know this because someone was applying for a loan of £10,000 and I was in at the time. I heard them tell the person it would have to be authorized by the head office. But they could give them £9,000 straight away.

Andrew1974

Hi. I would say you don't have to be saving with them for a while. You have to agree to save with them whilst you are paying back the loan.

I have never heard of read only access.

I would refuse this for a start. Mines wanted a copy of a bank statement when I applied for £5000. I told them to shove it.

antrobus

jonesMUFCforever wrote: »

......

Credit Unions do not have cash reserves as much as banks for bad debts so you need to show that you can save first.

On the contrary, they have plenty of cash. As at 30 Dec 2018, Loans to members £1.600m, cash £900m, and capital of £400m. That's a lot more liquid, and a lot more capital than your typical bank.

The problem that credit unions have is finding good quality lending.

https://www.bankofengland.co.uk/statistics/credit-union/2018/2018-q4

antrobus

Andrew1974 wrote: »

.....

I have never heard of read only access.

It's a feature of Open Banking.

https://www.openbanking.org.uk/customers/what-is-open-banking/

Sncjw

Remember your going to be assessed on affording double the debt. As you aren’t garuntee to use the new money to pay off expostulate f loan

A_A_Mole

donnac2558 wrote: »

You become a member of a credit union, the one I am with you pay £1 per year fee to be a member it is taken out of your savings. If you want to borrow over a certain amount £10,000 in my one they have to do checks. I know this because someone was applying for a loan of £10,000 and I was in at the time. I heard them tell the person it would have to be authorized by the head office. But they could give them £9,000 straight away.

Thanks, that's good to know re the £9,000.

I can join my one with a £10 deposit and £5 admin fee.

Might just do it and see what it is like.

antrobus wrote: »

The problem that credit unions have is finding good quality lending.

What does that mean? Trouble finding people to lend to? I'm here!

Sncjw wrote: »

Remember your going to be assessed on affording double the debt. As you aren’t garuntee to use the new money to pay off expostulate f loan

They pay the money directly to the people you owe.

But I guess you could just keep using the credit cards they've paid off.

But I wouldn't do that.

I'm paying about £375 in minimum payments, with more coming when my last card goes from 0% to 25%.

So a loan would be about the same. But with lower interest and the potential to pay it off in five years, instead of 20+ as it is now.

Sncjw

No they will assess you on affording twice the debt. They won’t pay direct you have to pay yourself.

All loans do this .

jonesMUFCforever

antrobus wrote: »

On the contrary, they have plenty of cash. As at 30 Dec 2018, Loans to members £1.600m, cash £900m, and capital of £400m. That's a lot more liquid, and a lot more capital than your typical bank.

The problem that credit unions have is finding good quality lending.

https://www.bankofengland.co.uk/statistics/credit-union/2018/2018-q4

So they have lent £1.6 billion pounds but only have £1.3 billion to back it up?
I agree most people who borrow from credit unions do so as a lender of last resort.

sassy_one

95% will require you've been saving with them for 3 months, and they let you borrow twice what you've saved.


Sometimes this isn't completely made clear until after sign up and trying to apply.

I know this as I've approached a few CU which all had this requirement.
Some said you had to be a member for at least 3 months, other said 3 months and twice whatever you paid in.

Some did have maximum load amounts, one I enquired with was £20,000.

No idea what Andrew is on about, as you have to be a member for a set time with almost all Credit Unions!