Loans Policy
One of the main objectives of the credit union is to provide affordable credit, even if you have no credit history.
- Loans must be for a provident or productive purpose. The purpose of the loan must be stated on the application form.
- You must be at least 18 years old to take a loan.
- You should borrow only what you need and what is comfortable for you to repay.
- There are no administration fees and life insurance is included on loans up to £5,000 to members up to age 79.
- If you die, your loan dies with you!
There are 2 Loan Products:
1. Freedom Loan
The freedom loan enables you to take a loan when you need it without the need to save first.
- The loan is assessed on your demonstrated ability to repay, so you will be asked for detailed financial information.
- You will be encouraged to save while repaying your loan but there is no compulsion to do so. Any savings that you have will be available for you to withdraw so long as you are not in arrears on your loan.
- The maximum Freedom Loan is £750.
- The interest is 2% per month on the reducing balance (26.8 APR)
| Amount of Loan (£) | Repaid Over 1 year | Repaid Over 2 years | ||
|---|---|---|---|---|
| Monthly repayments (£) | Total Cost (£) | Monthly repayments (£) | Total Cost (£) | |
| 100.00 | 10.00 | 112.70 | 5.30 | 126.81 |
| 500.00 | 48.00 | 566.34 | 27.00 | 630.83 |
2. Saver Loan .
To qualify for a saver loan, you must have:
- Made at least 8 weekly, or 3 monthly regular savings payments equal to the proposed loan repayments OR
- Have one third of the loan amount in share one, saved regularly OR
- Have saved at least £10 per week for six months while repaying a previous loan (Freedom or Saver)
- The Interest rate on Saver Loans is 1% per month on the reducing balance (APR 12.68%)
Always Look at the total cost when comparing loans with other lenders
Example
| Amount of Loan (£) | Repaid Over 1 year | Repaid Over 2 years | ||
|---|---|---|---|---|
| Monthly repayments (£) | Total Cost (£) | Monthly repayments (£) | Total Cost(£) | |
| 100.00 | 8.88 | 106.56 | ||
| 300.00 | 26.65 | 319.80 | 14.13 | 338.91 |
| 500.00 | 44.43 | 533.16 | 23.54 | 564.87 |
| 1,000.00 | 88.86 | 1,066.32 | 47.08 | 1,129.74 |
| 2,000.00 | 177.72 | 2,132.64 | 94.15 | 2,259.52 |
| 3,000.00 | 266.55 | 3,198.55 | 141.23 | 3,389.26 |
The maximum Saver Loan will be determined by your demonstrated ability to repay, within the limits below:
- Up to 3 times share 1 savings OR
- Current savings plus the figure below, whichever is the greater
| Payment Method | 1st Loan (£) | 12 months good repayment history (£) | 2 years good repayment history (£) |
| Cash | 750.00 | 1,500.00 | 3,000.00 |
| Standing Order (3 months record) or payroll deduction | 1,000.00 | 2,500.00 | 5,000.00 |
- No loan can exceed £7,500 above your Share 1 savings.
- A minimum of £2.50 per week or £10.00 per month must be paid into Share 1 (savings) throughout the period of the loan. This way you end up with more savings after your loan is repaid, reducing the need to borrow in the future.
- Savings in share account 1 may not be withdrawn until the outstanding loan is less than the savings value, at which time the difference may be accessed.
- As long as your loan account is not in arrears, you may withdraw savings from share accounts 2, 3, and 4.