Borrowing from the credit union
We don’t do “instant loans” but we don’t do external credit checks or intrusive interviews about your income and spending.
Instead we look to members’ savings patterns and loan repayments to establish an ‘internal credit rating’. So if you save say £5 a week or £40 a month for a couple of months, we reckon you can afford to repay a loan at that rate. And then if you repay that loan and continue saving, you’ll become eligible for larger loans.
So – you can apply for your 1st loan when you have saved regularly for 8 weeks (2 months if paying monthly). You can then borrow up to £100 more than you have saved. For instance, if you have saved £60, you can borrow £160.
If you pay off that loan properly, you qualify for a 2nd loan of up to 2 x value of your savings – so it helps to continue saving while paying off your first loan
After paying off that loan, you qualify for a 3rd loan of up to 3 x value of savings.
After paying off that loan, you can borrow up to 4 x times value of savings, up to a maximum of £3,000.
First loans need to be repaid in up to 39 weeks, and subsequent loans are normally arranged to be repaid over twelve months, but can stretch to a maximum of twenty-four months. But then again, there is no “arrangement fee” or penalty for early repayment.
Interest is charged at 1.25% a month (16.1% APR) on the outstanding loan – so for example, if your loan balance is £60, we’ll add (60*1.25/100=) 75p to that balance at the end of the month. Note we charge the same rate of interest on all credit union loans.
As part of the loan application process, you will get a repayment schedule which will show you the repayments and total interest payable if you pay off the loan regularly over the agreed term.