....They are charging their customers 12%! There is no need for a Credit Union at 12% as you can get loans elsewhere much cheaper....
the true fact of the matter is that Credit Union borrowers are actually paying closer to 16%,
The point being made about the insurance is very well made by all. Dare I ask why they credit unions don't scrap this cover ?
It's not as simple as that. What percentage of credit unions charge the maximum 12%? In many cases, both historically and more recently due to the banking crash, members of credit unions have access to loans from their own organisation whereas they may not be entertained by banks. The maintenance of Loan & Life Savings insurance provides some comfort that, if a member dies or becomes permanently infirm, neither they nor their family will lose the savings or be burdened by the loan.Good point and one which I have made often before.
But for many customers the rate is far higher than this because they pay down their loan while continuing to add to their savings.
And you have the bonkers position of credit unions actually offering "secured loans" @ "only" 6%. In other words, if you have shares of €10,000 and need to spend €10,000, they will lend you €10,000 at only 6% but you don't need to touch your shares!
If AIB or BoI tried to do this, there would be a Central Bank investigation.
Apparently the members love it.
Credit Unions destroy value and it's their members value which is being destroyed.
...And you have the bonkers position of credit unions actually offering "secured loans" @ "only" 6%. In other words, if you have shares of €10,000 and need to spend €10,000, they will lend you €10,000 at only 6% but you don't need to touch your shares!
If AIB or BoI tried to do this, there would be a Central Bank investigation..
Under the terms and conditions of this product, Permanent TSB will require the customer to hold either a Permanent TSB Deposit Account, a Third Party Savings Bond or the proceeds of a Life Insurance Policy as security against the loan. There are four tiers for the product: 100% Cash Secured Loan 6.4% - 75% Cash Secured Loan 7.0% - 50% Cash Secured Loan 7.5% - 25% Cash Secured Loan 8.0%
It's not as simple as that. What percentage of credit unions charge the maximum 12%?
In many cases, both historically and more recently due to the banking crash, members of credit unions have access to loans from their own organisation whereas they may not be entertained by banks.
The maintenance of Loan & Life Savings insurance provides some comfort that, if a member dies or becomes permanently infirm, neither they nor their family will lose the savings or be burdened by the loan.
It's a charge on general expenses before surplus is declared. So, if it affects the dividend, it affects the dividends of the higher saver more than that of the modest saver who needs to borrow.But it's just too expensive. Why not strip out that cost and allow borrowers optional insurance on their savings and deposits? Then the cost will be transparent.
So, if it affects the dividend, it affects the dividends of the higher saver more than that of the modest saver who needs to borrow.
The LP&LS(Loan Protection & Life Savings) insurance is priced at Xc per '000 of savings/loans. This means everybody gets it and nobody can opt out. If If the insurance was optional, members of more modest means may not choose it as it will cost more than currently. It's a co-operative benefit. Also, to make your counter argument, it would diminish the appeal of holding shares against borrowings. It might not strike you as the most effective model but it has grown over 50 years and to remove this would throw everyone to the mercy of the banks.Sorry, other than stating the obvious that makes no sense to me.
I presume, but maybe it's a wrong presumption, that the credit unions coordinate their interest rate charged and paid policies? If they are paying out money for anything, it affects the rates they charge and the rates they pay.
As with any financial product, it would be much better if they showed the premium for the various packaged insurances and allowed people to opt in or out of them.
Brendan
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