Credit Unions - Discuss!

[Peterbard]

As an ex voluneer and vice chair,then and paid development worker for the Credit Union, I thought that perhaps perhaps some people might be interestd in the way they work.

 

Most Credit Unions in the UK come under the umbrella organisation of ABCUL(Association of British Credit Unions)they have a very informative web site.Just type ABCUL into your browser.

Credit Unions are a Not for Profit Organisation which basically means that all the profits are put back into the fund or deployed amongst the members as dividends annually .Credit Unions are controlled by the FSA and have very strict guidelines on the amounts of cash reserves they carry in case of mass withdrawals.

The interest rate on loans is 12.68% apr or one percent per month.

The usual procedure for obtaining a loan is to open an account and save for a certain period usually decided by the management committee before a loan is granted, the amount loaned is usually set at a multiple of the amount in savings again decided by the management committee.

The management committee is elected by the members once a year at the AGM and any member can be nominated. It costs £1 to join.

A lot of Credit Unions are now issuing loans in special circumstances without collateral.

The clever thing about the repayments is that you agree when you take out the loan to pay a certain amount into your savings when you make a loan repayment.

To illustrate this, if you save an initial £50 the CU may lend you £100.The interest due in this would be £6.50 total over one year. So if you paid back £2.50 per week after a year you would have paid off your loan and have a balance of £73.50 in your savings. On a second loan most CU's offer a loan of three times your savings so you could borrow £220 and still have £74.5 in savings which helps the organisation to fund loans to other members and enables the lender to build capital as he repays the debt.

Life insurance is a part of the deal and generally pays out double the value of savings to the next of kin or authorised party as well as paying off his loan, this is a free service. The Credit Union is run by volunteers and it is not possible to be on the committee if you are a paid worker. Paid workers are usually only taken on by the larger Credit Unions where the amounts of Money involved require the specialised services not available in the voluntary sector, and yes these are usually funded by Grants from various sources.

I must admit to being a great fan of the Credit Union movement and i can say that very few things have given me as much pleasure as the time i was able to pay off a loan shark who was charging a whopping 430%apr on a loan for a member and set them on the road to controlling their finances.

The biggest Credit Unions in this country belong to the Police and Fire services who use their loans to buy their houses etc. And in Ireland the Credit Unions are huge and have many high street premises and many hundreds of thousands of members Issuing mortgages and provide all the services you would expect from your high street bank but withot lining the pockets of the directors.

 

[blueskies]

Thanks for the heads up there, I am particularly interested in credit unions and have sounded out the possibility of a member based organisation such as CAG eventually running a credit union. It would not bbe possible right now as, with our membership soaring we can only just keep control of the reclaiming charges side of things, let alone dealing with something new. If we do venture towards that I'm sure your knowledge will be invaluable.

[smoorach]

how interesting. i must admit to liking this idea and if one was ever run by cag i would certainly help out become a member etc. as it is i will look into this web site peter bard and many thanks for the information.

[Bookworm]

Moved to "other helpful organisations", as it will get more viewings than in the Welcome forum. ;-)

[blueskies]

Thank you Bookworm, I would have gone looking for it and forgotten what it was called and where it was without that.

[dave]

This looks and sounds good.

 

So how do you go about starting one?

[Bookworm]

ABCUL

 

 

Google, Dave, Google!!! ;-)

[blueskies]

Hi

I have tried to respond to Daves question but his mail box is full and i can't post on that thread.

could you forward this to him for me .

 

All the info you need is here

 

ABCUL

 

Pleas contact me if you need any help or if i can be of service I have oppened several CU outlets and am a bit of a fan.

 

Regards

Petr

 

Now why does that not surprise me that Dave's inbox is full:rolleyes:

[Target User]

Testing.

[vogelrok]

may aswell start discussing it. pros and cons of joining a credit union in your local area. most now have a current account with them.

 

can be used as one of your options for changing banks. think with your feet. you can get your wages paid in benefits to. dd's and standing orders can be paid from them. your giving back to your local area rather than some huge company with very fat cats up top.

 

will be moving all my money that i get from the sale of my house out of my abbey account and asking for the interest it will make the few days it will be held for. it might only be a few quid but i want it all.

 

its like changing my gas or electric supplier. i want less charges for letting them use my money i put into there accounts. its your right to do as you please. but if we all was to make a stand what choice does a bank really have.

 

ditch your bank if its one of the 8 that are in the test case. and use one that isn't if you want to give back to your area us the link posted above to look for a credit union in your area that offers a current account.

[maroondevo52]

I've been a member of my local Credit Union for abour six years now.

I had a loan with them four years ago, like with other loans, I missed a few payments.

The Credit Union took them from my savings, until the loan was paid off.

 

For the last 14 months I've been saving £100 per month, I applied for a loan last month and got knocked back.

 

So if you fall on hard times and can't repay your loan, even when you've got enough savings to cover it, you've no chance of getting another one ?

 

I thought they were being a bit hard on me, or maybe not, am I getting what I deserve.

 

Regards.

 

Scott.

[jannercobbler]

I've been a member of my local Credit Union for abour six years now.

I had a loan with them four years ago, like with other loans, I missed a few payments.

The Credit Union took them from my savings, until the loan was paid off.

 

For the last 14 months I've been saving £100 per month, I applied for a loan last month and got knocked back.

 

So if you fall on hard times and can't repay your loan, even when you've got enough savings to cover it, you've no chance of getting another one ?

 

I thought they were being a bit hard on me, or maybe not, am I getting what I deserve.

 

Regards.

 

Scott.

 

Have you tried talking to the Credit Union? they will also have an appeals process. At our credit Union we look at several factors when assessing Loans. Including previous loans and ability to repay the requested amount. I would advise having an informal chat with them, as they normally always try to help.

Edited May 25, 2008 by jannercobbler
more info

[maroondevo52]

Hi, jannercobbler.

 

Thanks for your input, I did'nt go back to them as the letter they sent me stated the reason I did not get the loan, was because of my failure to keep up repayments on my first loan.

 

They even sent me copy statements to back up their claim

 

 

Regards.

 

Scott.

[jannercobbler]

Hi, jannercobbler.

 

Thanks for your input, I did'nt go back to them as the letter they sent me stated the reason I did not get the loan, was because of my failure to keep up repayments on my first loan.

 

They even sent me copy statements to back up their claim

 

 

Regards.

 

Scott.

 

It may still be worth talking to them and let them know the reasons why you had difficulty with repayments before (maybe your circumstances have since changed), especially if your saving the amount you currently are.

 

I know at the Credit Union I'm with they would look at all issues and maybe agree a smaller loan to begin with to see how you manage that.

 

Credit Unions normally try to help people, especially if some of their members are on limited incomes.

[maroondevo52]

Hi,

 

The amount I asked for was £4,000. which I know is a large sum and I do not have enough savings to cover it, like you say my circumstances have changed for the better and by saving the amount I have without missing a month led me to believe I would get the loan.

 

As you will know, they let you borrow 4 times your savings, I had more than enough to cover that side of it.

 

I may go back to them, I just hate being knocked back :o

 

 

Thank again.

 

Regards.

 

Scott.

[jannercobbler]

Hi,

 

The amount I asked for was £4,000. which I know is a large sum and I do not have enough savings to cover it, like you say my circumstances have changed for the better and by saving the amount I have without missing a month led me to believe I would get the loan.

 

As you will know, they let you borrow 4 times your savings, I had more than enough to cover that side of it.

 

I may go back to them, I just hate being knocked back :o

 

 

Thank again.

 

Regards.

 

Scott.

 

Hi,

 

you may like to know that many Credit Unions offer a max loan of 2 times your savings for the first loan over a max of 12 months.

 

A second loan is generally permitted for a maximum of 3 times your savings over a maximum of 2 - 3 years depending on your Credit Union.

 

Any future Loans are normally for a maximum of 4 times your savings over a max of 4 - 5 years depending on your Credit Union.

 

They will also have a maximum loan amount that can be lent.

 

So talking to them would be best and maybe you can then agree with them a Loan amount and a repayment term that suits both parties, as I said they may agree a lesser amount to see how you manage now.