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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 the normal office hours. A decision on the application will usually be available within a few hours or on the following Tuesday.
The legal maximum for loans is £50,000 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). Omagh 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 and can effect their credit rating.
Loans are decided on the member's ability to repay, so the member is advised to bring in as much evidence as possible. There is NO specified probation period for any member to serve before applying for his/her first loan.
The following are some of the factors taken into account when considering a loan application- Total financial outgoings of applicant
- Applicants employment details
- Ability to repay
- Purpose of Loan
- Credit Bureau Search
- In certain cases a Guarantor, whose credentials will be checked, will be sought
- Loan repayment record will ALWAYS be checked when loan applications are being considered. Very often this will be the single most important factor in determining the success of a loan application
- In some cases a loan application will be refused pending a face-to-face interview with the loan applicant
- Members are expected to state the purpose for the loan they are seeking and, on occasion, proof of this purpose will be sought.
- When negotiating repayment of their loan, members are expected to make repayments over as short a period as is affordable for them.
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.
It should also be noted that loan applications are considered by the loans committee and counter staff are not involved in such decisions.
How Do I Apply For A Loan?
Proof of income and up to date current address/photo ID 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. 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.
Age Limits
A member must be at leat 18 years old before being granted a loan. Loans to members approaching their 85th birthday must be set up to be cleared by that birthday or guaranteed or covered by members pledged shares. members who have passed their 85th birthday must enter into an agreement that their loan is guaranteed or must pledge their shares in writing.
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.
Promissory Note
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.
Pledged Shares
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 Omagh Credit Union that any money saved after the loan is granted may be withdrawn if the loan is not in arrears.
Repayment Difficulties
There may be times when, for genuine reasons or unexpected circumstances, a member finds difficulty in maintaining the promised repayments.If the account should go into arrears members need to be aware that this may effect your Experian Credit Rating even with a Covered By Shares Loan. 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.
Click here to for more information from our credit control department.
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