loan and payments barely dropped

gavincork

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Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.
 
Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.
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It seems to be (odd) the way Credit Unions account for lump sums.

Should be easy to sort by asking them.
It is probably that the system only recognises interest; so the (loan) appears to (need) the 26.

Call in and I am sure they will sort.
 
Hi a family member owned the cu 6000 and had weekly repayments of 37. They paid off 5000 of the loan and the repayments are now 26. Is this right? I would have thought that the payments would be far less.
Presuming that all payments were up to date the lump sum payment (€5k) would have been applied agains the remaining principal.
That would mean the loan term has reduced by 5/6ths.
The change in repayment is likely due to the interest due per repayment, now based on a loan balance of < €1k whereas before it was on a loan balance >€5k.

If you supplied more information original term, fixed or variable repayment, remaining principal balance, interest rate - a more accurate answer could be given.
HTH
 
Hi Crugers

When someone pays a lump sum off a mortgage, they are asked if they would like to reduce the repayment amount or the term.

Do the CUs offer this choice for loans which are on schedule?
 
When someone pays a lump sum off a mortgage, they are asked if they would like to reduce the repayment amount or the term.

Do the CUs offer this choice for loans which are on schedule?

If a member specifically wanted to change the repayment value and leave the term as is - it would be best to create a new credit agreement with amended agreed terms.

After a lump sum payment the loan "status" would technically be "in advance". So it would be possible to reduce the repayments and not be "in arrears". However that could be a situation where the CU could argue that you are NOT sticking to your original agreed repayment and in some cases that would be correct and appropriate.
 
yiu

I know that in the credit union union of which i am a member you would be given a choice of what you would want your new payment to be after making a lump sum lodgment. So for e.g it it was your family member who are now 5000 prepaid they would be asked how soon do they want to repay the remaining €1k if they want to keep to the original agreement the repayments would be a lot less however the member may wish to repay the loan faster therefor the reduction might not be as great.Don't know if i have explained myself very well with this post so apologies if i haven't.
 
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