Personal Loan: Online Bank v Credit Union

M

Manuel

Registered User
Messages
152
Hi,
I'm a bit rusty with loans, as I haven't had one out for a while.
I was in my Online Banking this morning and the following notice caught my eye:

7.5% - Our best available loan rate
7.5% APR, exclusively for you. Get your low-rate personal loan in just 24 hours. Borrow between €300 and €65,000 for whatever you need.

I'm considering a car loan, and I hadn't really looked past my Credit Union, as they offer 7.2% APR for a Car Loan. The banks all seemed to be offering only double digit rates.

So I made a comparison:

Bank Personal Loan:
Repayment Interest
€10,000 7.5% APR 5 years €199.22 €1,953.20

CU Car Loan:
€10,000 7.2% APR 5 years €198.96 €1,937.60

My question:
These are both variable rates. Can I not get a fixed rate for a personal loan? Is this because the interest rate can't fall any further, so banks are covering themselves against a rise?

When comparing the two, the bank is now surprisingly the better option for two reasons that I can see:

1. For CU, I would need €1,000 in shares, which would be frozen for the loan term
2. CU would limit me to a loan of 10 times my shares value

Am I missing anything?

Thanks!
 
1. If you got fixed and want to repay early ,you will be hit for most of the interest over the full term. Don,t know if anyone is doing fixed loans.
2. The Bank will probably have set-up fee of circa e70 which balances out the slightly better bank rate v Cu.

The 7.5% Bank rate is probably limited to their own or very good earning customers?
Might be no harm to apply to both and let us know how you get on.

In general C u,s are no dearer for loans and have a much better customer focus.
 
Every CU is awash with Deposits and most (if not 100% of them) are more interested in getting a loan our rather than tying up your shares. If the 1000 in shares is an issue, ask if you can tie up 500 or 250. In most cases thats fine, as the loan will be repaid from your income not your savings.

Don't forget, you get free life insurance when you borrow from a CU, as well as the community benefiting from the interest you pay.

When you pay interest to a bank, it ends up in profits that goes to shareholders, & I guess you are not a shareholder in the bank. But you are a shareholder in the Credit Union.
 
Applied for this Personal Loan with the bank, having first phoned to check eligibility, and told yes, fire ahead.

Got the following reply, summarised by me:

Thank-you <etc> .... I must inform you that, after careful consideration, we are unable to facilitate your application on this occasion.

We based our decision on the information you supplied to us. If you believe that there is any other relevant information that would support your application, please write to us with the details at ....

We would certainly be happy to consider a new application for you in the future, should your circumstances change.

Your sincerely,

<No signature or even name provided>

Direct Sales Manager


Now, call me naive - as I say, I haven't applied for a personal loan in a while - but I think this is an absolutely disgracefully way to "reply" to a loan application from a customer of 25 years.

The Mrs & I have a good mind to go in on Monday and withdraw all our business (25 years Current Account each + Mortgage), but I suppose in our hearts we know nobody in there would give a flying fluke ......

Thought I'd share it anyway. I guess if a personal loan rate looks too good to be true, that's because it doesn't actually exist in practice?

Silly me.
 
I'm afraid you probably are a bit out of the loop or naive if you like :) Banking has seriously changed.

More than likely a computer scored your application based on the replies you gave to the questions and a computer didn't like the total and it replied to you in the only way it knows how. Probably a human never even glanced at it other than to put the letter in an envelope.

If you are the ideal customer than it might have been a far better idea to actually go to your bank branch and apply through them, then at least there might have been some 'recommendation' based on your history put on the loan application before it went to Head Office. Then again with all the changes maybe there is no one in the branch who can meet you to actually do this!
 
Monbretia said:
I'm afraid you probably are a bit out of the loop or naive if you like :) Banking has seriously changed.

More than likely a computer scored your application based on the replies you gave to the questions and a computer didn't like the total and it replied to you in the only way it knows how. Probably a human never even glanced at it other than to put the letter in an envelope.

If you are the ideal customer than it might have been a far better idea to actually go to your bank branch and apply through them, then at least there might have been some 'recommendation' based on your history put on the loan application before it went to Head Office. Then again with all the changes maybe there is no one in the branch who can meet you to actually do this!
Click to expand...

Human being probably never even put the letter in an envelope, that can be automated too.

However the computer bases it's scores on the information put in and obviously, the bank's automatic scoring system does not believe the OP has the means to repay the loan or has a negative credit history for some reason. Before storming into the branch, the OP should consider why he failed to secure the loan. Without more information , it is impossible to give more advice
 
There can be very silly things on those credit scoring systems too though, points for having a home phone for example and other such questions that really don't affect income or credit rating. There is a knack to filling them to ensure the max score assuming the income/credit rating bit will not be an issue :)
 
thedaddyman said:
Without more information , it is impossible to give more advice
Click to expand...

Well, this was my point really ...

We would certainly be happy to consider a new application for you in the future, should your circumstances change.

Change how exactly, or even vaguely, based on the initial assessment?

I'll just have to find an actual person to talk to. I'd phone my branch for an appointment, if only the branch contact number would put me through to an actual person. I'm sure there's a way ...
 
Manuel said:
Well, this was my point really ...

We would certainly be happy to consider a new application for you in the future, should your circumstances change.

Change how exactly, or even vaguely, based on the initial assessment?

I'll just have to find an actual person to talk to. I'd phone my branch for an appointment, if only the branch contact number would put me through to an actual person. I'm sure there's a way ...
Click to expand...

Apologies for not making myself clear, if you want more advice from someone on here, then you will need to provide more information as to what you put down on the initial assessment
 
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