CU Manager
Registered User
- Messages
- 108
Worse than what? - Not sure what you're getting at there (can you expand a little?)This is much worse than I thought.
Our standard rate is now 12%. Within shares = secured loan = 5% and yes, someone in the scenario you outline would be paying 12% on €5,000 and receiving 1% approx in dividend on the savings of €4,000. This has been the CU business model for 50 years!Are you saying that someone who has a loan of €5,000 and shares of €4,000 is paying 10% (not sure what your standard rate is?) on the loan and getting 1% on the shares?
Most performing loans will start off as a multiple of the savings collateral and then trend down towards the savings amount over several years. Most traditional CU loans are over 3-5 years but the overall loanbook would rollover every 3 years approx. Slightly more tan 33% of the entire loanbook will have savings attached to it. Simple maths - loanbook of €30M will have approx €10M savings collateral against it.How common is this?
???? Crossed wires here I thinkI don't understand your point. I am not saying that they are anti-member, it's just that they are not acting in their members' best interests.
Except that the insurance is not self insurance - its provided by an insurance company called ECCU owned and operated by the Irish League of Credit UnionsThe Credit Union is a union of members, acting cooperatively. It should not be customers vs. lender. If the CU manager knew about this big operation, he should not have given out the loan. It seems to me that the customer was playing the system and could have cost his fellow members dearly.
I simply outlined the legal position and qualified it by saying that I have no problem informing a member that its cheaper for them to use their own funds. I further pointed out that pre-contractual information is also provided to the member prior to drawing down the loan outlining the full cost of credit and allowing them to withdraw from the contact without penalty.I don't get this. The Credit Union is a mutual. It should be acting in the best interests of its members. It should not be about whether there is a legal obligation on them or not.
There is no such term as Net APR - no legal definition in any case. We do not require a set amount of savings against a loan apart from a minimum of €10 savings (our own policy) so members have a choice on how much collateral to offer prior to taking out a loan.54% net APR? I am speechless.
I don't like this borrowing on behalf of a child, but I can see that it might appeal to some people. If the parent is prepared to take the liability, he should simply lend the money directly to the child. However, I see that the child might take a credit union loan statement in their parent's name as belonging to them and they might feel more obliged to pay it off rather than pay off a personal loan.
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This is not always true but I'm sure that anecdotal reports to the contrary (such as that of a friend of mine posted elsewhere) will be dismissed by some as "bad luck" or unrepresentative or indicative of some sort of anti-CU crusade.The whole ethos of the credit union is about being a collective group who help people who otherwise would not get loans. They are friendly and approachable, if you get into difficulty they are quick to set you on the right road.
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