Credit Union apr

mrpinc
mrpinc Posts: 8
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Hi all, has anyone experience/knowledge of loaning from a credit union?
I've been a member for around 5 years, saving what I can against unexpected bills. I've recently had to spend all my small savings on car repairs and still need about £500-600 work done. 
When I used the credit union loan calculator to loan £600 over 12 months it came up with an Apr of 62.4 which flummoxed me as they quote low interest rates. 
Is there something I'm missing or am I just being really dim not understanding how their loan system works?



Comments

  • mrpinc said:
    Hi all, has anyone experience/knowledge of loaning from a credit union?
    I've been a member for around 5 years, saving what I can against unexpected bills. I've recently had to spend all my small savings on car repairs and still need about £500-600 work done. 
    When I used the credit union loan calculator to loan £600 over 12 months it came up with an Apr of 62.4 which flummoxed me as they quote low interest rates. 
    Is there something I'm missing or am I just being really dim not understanding how their loan system works?




    I suspect a loan from a CU is pretty much the same as from a bank.
    For my local CU theres 2 loan options for current customers, maybe not all are the same but I suspect any apr is based on your credit history plus what you have saved with the CU.
    Speak to your credit union
  • mrpinc
    mrpinc Posts: 8
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    For info if anyone else is unsure how credit union loans work......I contacted them and was told NO, I DON'T qualify for a loan. Despite being a member for over 5years and never asking for a loan before. If I WAS NOT a member (ie a totally unknown quantity financially),  I WOULD qualify for a loan provided I joined. Unbelievable. I only joined as I was advised the credit union was a "safety net" if I needed a loan in an emergency. I'm now unable to repair my car which will have huge repurcussions when it inevitably becomes unroadworthy. Hopefully no one else has been given the same misinformation and finds themselves in the same situation. I'm totally mind-blown by their logic and totally poleaxed by the result. 
  • [Deleted User]
    [Deleted User] Posts: 35,242
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    They've mis informed you.
  • Caz3121
    Caz3121 Posts: 15,514
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    mrpinc said:
     being a member for over 5years
    how much have you saved with them over the 5 years? are you able to withdraw that?
  • rich184
    rich184 Posts: 8
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    That APR isn’t right.  Legally, the maximum APR a credit union can charge in Great Britain is 3% a month on the reducing balance which works out as approx 42.6% APR.  
    Credit unions as responsible lenders have to assess loan applications for affordability.  They want to lend! 
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