Credit union loan vs share withdrawal scenario

S

scarednow

Registered User
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54
Hi

Currently have CU loan with balance ~10500 and shares of ~2900. I applied for a top up of 500 euro for expenses relating to the upcoming school year, and my application was rejected. I then enquired about withdrawing shares and was told that I must have at least 25% of my loan balance in shares, which is fine. My question is, the credit union is in the business of making money by getting interest on deposits / loan repayments each month. I was told the most I can withdraw is 275 euro.

My repayments are made by standing order each month, are above the signed agreed repayment rate and I simply can't understand why the credit union would advise me to take out 275 shares rather than give me a loan for 500 which they may make say 550 euro back on?

I'm at a loss but to me this whole responsible lending has gone crazy looking at these figures - maybe i'm missing something!
 
Last edited:
Hi Scarednow,

I would recommend writting a frendly well constructed letter to the 'credit committee' outlining:

- How long you have been a member
- The fact that you have been overpaying the loan as per your credit agreement (say for
long)
- Ask to meet with them should they have any concerns about the top up.
- Remibd them that they should be acting within the interest of the members.

Rightly pont out that they will make further profit from the top-up.

Some times it requires a gentle escalation of the issue in order to get things moving.

Best of luck
 
Is your loan constructed of one financial purchase or is it a series of top up loans after another. Is it is the latter that may be another reason as to why it was rejected as they may see it as the loan will never be fully repaid - or it will be a long time before it is.(not sure I'm using the right words there to explain it)
 
One possible approach as per the thread that Slim referenced ... maybe ask them to

  1. offset your €2.9K in shares (less whatever amount you need to retain in shares to remain eligible for members' loan insurance etc.) against the outstanding loan balance of €10.5K leaving €7.6K outstanding
  2. retain the original repayment schedule (number of monthly or other repayments) but
  3. reduce the ongoing repayments to reflect the reduced loan balance and this (maybe coupled with the withdrawal of €275 that they are allowing you to make?) may yield the €500 that you need for school expenses?
 
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