Brendan Burgess
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This question was asked by Limelawn in this thread
loan|€5,700
shares|€5,500
Net borrowing|€ 200
Limelawn needs about €800 for Xmas.
The Credit Union Act says:
The borrower cannot insist on making a withdrawal.
He can apply to the Credit Union, and if the Board approves, he can withdraw money as long as he keeps 25% of the outstanding loan in shares.
shares|€5,500
He must keep 25% of €5,700|€1425
So the board can approve a withdrawal of up to |€4,075Can the manager approve the withdrawal?
No. It must be approved at a board meeting.
If you need the money in a hurry?
The manager can approve an immediate increase in the loan and you can then wait for the board meeting to approve the withdrawal.
But our CU does not limit loans to 4 times savings?
Some CUs will lend only 4 times savings. Most have dropped this practice, so they may well give you 10 times your savings. But once you have a loan and savings in place, the CU Act forbids you from reducing the savings below 25%. This is not a matter of CU policy. This is the law.
What else should the borrower be considering?
If Limelight has a progressive Credit Union he should ask the Board to set his entire shares against his loan account, thus reducing his balance to €200. You can find out how to do this in this thread.
They should then increase his loan by €800.
What if the CU refuses?
In Limelight's particular case where he has net indebedness of only €200 on which he is paying the CU at least 100% interest, he should borrow €200 from a friend, or even on his credit card, and pay off the CU loan in full.
shares|€5,500
Net borrowing|€ 200
Limelawn needs about €800 for Xmas.
The Credit Union Act says:
The borrower cannot insist on making a withdrawal.
He can apply to the Credit Union, and if the Board approves, he can withdraw money as long as he keeps 25% of the outstanding loan in shares.
He must keep 25% of €5,700|€1425
So the board can approve a withdrawal of up to |€4,075
No. It must be approved at a board meeting.
If you need the money in a hurry?
The manager can approve an immediate increase in the loan and you can then wait for the board meeting to approve the withdrawal.
But our CU does not limit loans to 4 times savings?
Some CUs will lend only 4 times savings. Most have dropped this practice, so they may well give you 10 times your savings. But once you have a loan and savings in place, the CU Act forbids you from reducing the savings below 25%. This is not a matter of CU policy. This is the law.
What else should the borrower be considering?
If Limelight has a progressive Credit Union he should ask the Board to set his entire shares against his loan account, thus reducing his balance to €200. You can find out how to do this in this thread.
They should then increase his loan by €800.
What if the CU refuses?
In Limelight's particular case where he has net indebedness of only €200 on which he is paying the CU at least 100% interest, he should borrow €200 from a friend, or even on his credit card, and pay off the CU loan in full.