Are those with previous poor credit records able apply for a loan?

Even if an owner-member has or had financial difficulties, provided these are declared in full with the reasons (in utmost confidence) at the time of the loan application, the request will be treated fairly and full consideration given to the request, as well as where possible guidance given.  A unique credit union difference!

What happens when an owner-member:-    

• Has difficulty making a loan repayment when due and in full

Circumstances can change for all sorts of unexpected reasons to most people sp if an owner-member as a borrower and saver has any sort of difficulty preventing the repayment of a loan instalment in full and when due, immediate contact should be made with the credit union so it can try to assist.

In most instances when this happens, alternative or revised arrangements can be made with the owner-member.  A unique credit union benefit!

However, if any borrowing owner-member does not keep to any loan arrangement made, then collection procedures are made that could lead to Court actions and beyond, with costs to be met by the defaulting owner-member.

In fairness this is stated in the loan application and loan agreement as a condition for receiving the money.  These conditions form part of those for “trading fairly” and are set by the Financial Services Regulators.

• Is unable to work and make loan repayments

In many credit unions it is possible for an owner-member to protect the continuity of loan repayments when due against any unexpected event, such as but not exclusively, sickness accident or redundancy (subject to individual terms and conditions) paid for by themselves.

• Wishes to repay a loan earlier than the full term

The capital outstanding is repaid, there are no early redemption payments or penalties due.

•  Dies still having an outstanding loan?

Most credit unions take out loan assurance on the total sum of all loans then outstanding so that on the sad death of an owner-member, this sum is paid off on their behalf, so the “debt dies with the debtor” and this means that no claim for the outstanding money is made to the owner-member’s beneficiaries. The credit union pays the cost of the premium as an allowable expense – another unique credit union benefit!

• Loans outstanding are not repaid or recovered? How can this affect my savings?

By regulation, credit unions must allocate to “reserves” sufficient funds from its trading surpluses or obtained from other sources, to be used as a cushion if necessary to offset the effect of loans that are not repaid.

Even in the rare case of the failure of a credit union, all credit unions along with all other authorised deposit takers must pay a tariff to the UK Financial Services Compensation Scheme that protects individual member’s savings up to an increasing limit set by that body from time to time.  This protection also applies to the liquid funds of the credit union should its’ authorised deposit holder be declared insolvent.