This week we will look at some of the common myths that are out there with respect the Credit Union and how we process loans! Whether you are borrowing a small amount to cover an unforeseen emergency or a larger amount to finish off your new home, the same principles will apply with respect to getting a loan, in summary;
Debt/Income assessment; quite simply put, how much disposable income do you have to service the new loan i.e. do you have a mortgage, other personal loans or credit card debt? Can you comfortably afford extra borrowing? In extreme cases, where there is financial hardship beyond the control of the borrower, the Credit Union Manager will work on possible options to alleviate and provide guidance on repayment options, every loan application is reviewed on the merits of need and our ability to help out each Member within the acceptable tolerances set by the Board of Directors and Central Bank. The Credit Union does not seek any collateral against loans.
Current Loan repayment history: As a Member, do you have a loan here already, have you been able to service it as contractually agreed? Missed payments and arrears are indicators of repayment distress and may impact future borrowing. Donegal Town Credit Union now engages with the Central Credit Register which monitors credit applications beyond Ireland and provides a more comprehensive borrowing overview of each Member’s debit obligations.
Regular Savings: The Credit Union encourages regular saving, without any regular income from our Members, we would be unable to distribute loans – simply “no money in – no money out”. We will look at some of the common myths starting with;
Myth: Personal Loans Have a Very Long Application Process!
Applying for a personal loan is not as arduous and time-consuming as many borrowers think. One way to make the process run smoother is to have all the documents and information needed for the process prior to when you apply. Not having the right information available is the biggest reason that personal loan applications take longer than an hour or two. Donegal Town Credit Union has invested in automating this process by utilizing an appointment system that permits Members to forward their financial information in advance of appointment so that the Loans Officer can do provisional underwriting before the appointment.
Myth: Savings have to be a percentage of loan amount!
The Credit Union does not have a ratio of savings to borrowed amount, we will require some Shares (savings) as security against the loan amount as it other Members money we are lending out! Savings regularity is what we require so that we can meet our loan projections and future planning. Express Loans shares up to a maximum of €1000 are available to new Members who do not have a savings/loan track recordwor.
Myth: You Must Have a Good Credit Score to Take out a Personal Loan!
It’s commonly believed that people with bad credit won’t be able to qualify for a personal loan. The Credit Union understands that circumstances happen to everyone outside their control, i.e. poor health, job losses, death of a family member – we will review each application on the merit of the Members personal circumstance and every effort will be made to assist the member – lower credit score doesn’t mean you won’t qualify at all.
Myth: You Must Have paid off most of your Student Loan before you apply for additional funds!
The Credit Union understands that the average College placement will take a minimum of three years to a maximum of seven years and that it would be virtually impossible for any Student/Guarantor to carry all this debit without regular incremental additions for the duration of the college commitment! We work with student to provide an ‘interest only’ fee payment for the 1st year to allow the student to get a job and start payments for year two – each college application will be reviewed on the anniversary date and a new application will be agreed each year.
Money Fact of the week: Pennies buried in a garden will repel slugs, which get electric shocks from touching copper and zinc!
p.s. Don’t forget Annual General Meeting – November 30th 2018 at 7:00pm in the Abbey Hotel……