You have also used a simple method of calculating the interest. 12,000 paid over 1 year in a credit union at 10% would result in the member paying interest of around 650 euro, due to interest being charged on the reducing balance.
........we will overcharge you on your loan – but we might be able to refund you what we overcharge you on your loan.
@ontour
Introducing the canard of free life insurance is a red herring - if the insurance wasn't paid for by the credit union then it could either (a) pay a higher dividend to the living and or (b) charge a lower rate on the loan to the living.
Why not use an average of the last 5 years?The 1% I use if of course generous given that 300 paid 1% or less last year (of these close to 100 paid nothing at all).
I may be misunderstanding but my reading was that your rate of 5% was based on a 5 year fixed rate. Where does your 5% net of DIRT come from?My example does stand as I am looking at the effective rate and calculating what that rate would be in the first year
But let's forget about the secured nature of the bank deposit - say the bank lends the money unsecured and I put the €5k on term deposit with it. The result is of course the same in terms of the effective interest rate.
Have you a reference for this? I am sure this would interest the regulator and put the credit union in a weak position if they had to pursue the loans through legal channels.The credit union would lend me €11k, give me €10k and open a share account putting the €1k into it.
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