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.
Loan applications may be made at any time during normal office hours or online and a decision on the application will usually be available the following day.
Payments are arranged to suit your circumstances and there are no penalties for early repayments. Proof of earnings, guarantor and/or other conditions may be required.
Legislation requires that unsecured loans must be repaid within 5 years. (This period may be increased by future changes in legislation).
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
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.
- 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
It should be noted that the Credit Union is not required to state the reason for refusing to grant a loan. It should also be noted that loan applications are considered by the Loans Committee and counter staff are not involved in such decisions.
While the present legal term for loan repayment is five years, there are certain loans which are regarded as Annual loans, eg. Holidays, Christmas, Car Tax, Insurance, Rates etc. Such loans should be fully paid within 12 months.
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are equal to or less than the loan amount, those shares /savings become pledged as security for the loan and may not be withdrawn. It is the policy of Pennyburn Credit Union that any money saved after the loan is granted may be withdrawn if the loan is not in arrears.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.