Loans - Holywood Credit Union
Members of the Credit union who are of full age – 18 years – may apply for a loan for a provident or productive purpose. All loans are provided from the savings of other members.
The legal maximum for loans is £15,000 above a member’s savings. This limit applies to all members of the Credit Union. (This does not mean that a member can demand a maximum loan).Holywood Credit Union’s loan policy allows members to borrow up to the amount of their savings at any time. Members with covered by shares loans should ensure that repayments are maintained regularly otherwise arrears will occur which may affect the granting of later loans.
A member will normally be expected to establish a regular pattern of savings before applying for a loan. Members with small savings cannot expect to receive large loans. As a rough guide, a member should have saved one quarter to one third of the amount they wish to borrow. (This does not mean a member can demand a loan of three or four times savings).
The following are some of the factors taken into account when considering a loan application
- A regular pattern of savings
- The member’s previous loan repayment record
- The purpose of the loan
- The member’s ability to repay as agreed
- Frequency of loan applications
Every loan application receives careful consideration and most loans – over 95% – are granted. However, in the best interests of the Credit Union and indeed of the member concerned, some loans are refused, if a member is refused members may appeal the decision in writing to the board of directors who will review the decision.
How do I apply for a loan?
You must be a member for at least 13 weeks with regular payments into your savings. Proof of income and current address may be required. Complete an application form in person with Credit Union staff or if it is not convenient to come into the office an application for a loan can be made over the telephone or on the website if you’re a registered user. The Credit Committee meets at least weekly to consider loan applications with arrangements in place for the committee to decide on the granting of loans more frequently if this is required. Staff should be contacted if a member has any queries regarding applying for a loan. The Credit Union exists to accommodate the needs of its members but at the same time not to get them into financial difficulties.
What is the rate of interest on loans?
By law, a Credit Union cannot charge more than 1% per month on the reducing balance of a loan. This Credit Union endeavours to give a rebate on loan interest paid which depends on the annual surplus available in each financial year. therefore loans may cost less then 12.68% APR. Credit Unions do not charge fees or transaction charges. Since interest is charged only on the outstanding balance of the loan, you will pay less interest if you repay your loan in a shorter time then planned. Thus the Credit Union gives you control over your finances even when you are a borrower.
Before any loan is paid out, the member, and where applicable the guarantor, is required to sign a PROMISSORY NOTE. This is a legal document whereby the member – and the guarantor – promise to repay the loan and interest at a stated rate of repayment.
Where the amount of shares/savings at the time a loan is approved are equal to or less than the loan amount, those shares /savings become pledged as security for the loan and may not be withdrawn. It is the policy of Holywood Credit Union that any money saved after the loan is granted may be withdrawn if the loan is not in arrears.
There may be times when, for genuine reasons or unexpected circumstances, a member finds difficulty in maintaining the promised repayments. If this happens it is essential that the member contacts the office immediately. Any delay will make the situation worse and it will become harder to make a new repayment arrangement. Our Credit Control Officers are always available to discuss loan account problems.