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Credit unions Vs Wonga short term loans

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Paul_T View Drop Down
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    Posted: 15 Feb 2012 at 8:36pm
Credit unions explained:

Credit unions are community saving and loan cooperatives that are usually formed to members with a common bond, in other words you are in common with something that the credit union has to offer such as there may be be a credit union for the Police, fire service & ambulance services etc. However some credit unions are more relaxed who they let join their union, so you need to find out exactly what the unions terms are at a particular credit union. Members in these credit unions save money on a weekly or monthly basis and contribute to a pool, members that save can receive dividends on savings usually paid annually, depending on the union, members may get paid up to 8% or not get paid a dividend at all.

Credit unions are excempt from paying tax on any small profits that they may make. Credit unions can not lend all of the pool out at once but must keep some funds in a bank account or invest in reliable investments such as government bonds etc. Credit unions are only allowed to charge up to 2% on loans per month (APR 26.8%).

To join a credit union you must go down to your local union or union of your choice and find out what the terms of membership is with respect of the common bond and you must have two or more forms of ID to prove who you are. Most credit unions will not lend to new members immediately, most newbies will have to save for a required period of time before a loan can be offered. The positive side of joining a credit union is the fact that they offer free life insurance and loan protection.

So with all the above explained briefly about credit unions I would like to go into the reason for this topic. Over the recent past weeks I have seen Stella Creasy on ITVtonight & twitter advertising the fact that credit unions are so much cheaper than Wonga or payday loans. While Stella Creasy is correct in what she states I find that Stella does not really show the whole scenerio and makes it all look so easy. On ITVtonight Stella Creasy was advising people not to use payday lenders in the high street but join a credit union, on twitter Stella also states that companies like Wonga charge 4214% APR against 23% - 26.8% APR with credit unions. While Stella's motives are only for the best intention of people in debt I just don't think things are quite that simple in reality.

There is a saying "If things seem to good to be true they usually aren't". What i'm basically saying is if you ever take the opportunity to join one of these credit unions before you need a loan then all well and good "Well done etc". If you are not a member of one of these unions and you need money fast then usually joining a credit union will be frustrating as you need to save for so many weeks before they will even consider lending you money back. What about if you only need a loan for a few days? why go through the hassle of joining credit unions where you need to be a saver? Credit unions are also limited on the opening hours! what about if you need a loan for something fast like say at B&Q that closes at 8pm and it's 7.25pm would a credit union sort this? NO! but Wonga or other payday/short term lenders could. Wonga and other lenders are usually a 24 hour service online and more convenient with simple loan applications and fast transfer speeds.

What my point to this topic is, there are swings and round abouts with credit unions and short term loan providers. While I find Stella's motives with the best intention of the borrower they are not always the most convenient.

Paul Turvey.


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amanda View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote amanda Quote  Post ReplyReply Direct Link To This Post Posted: 19 Feb 2012 at 8:40am
good to see u talking about credit unions. However some of ur facts are wrong. Having been a member of my local credit union for 20 yaers and worke there for 6. Some credit unions DO NOT require u to save first, in fact in my area the WHOLE OF THE WEST OF SCOTLAND is covered by credit unions that offer loans outwith savings. Thanks to the new LIO the common bond issue has been removed and u have also frogot to metion that the interest is charged on a decending balance. My ouw credit union can turn a non share based loan round in a few hours. yes this is longer than wonga but our new members dont mind this and i have been thanked by hundereds of ppl who are so thankful there is a real atlerntive to pay day loan companies.
 
Also the DWP is currently working with ABCUL to assist in the development of extended services. Yes ppl have a choice but many do get trapped by pay day loans. Wonga is not the worst as its charges are very clear, but they are on the list.
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Paul_T View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Paul_T Quote  Post ReplyReply Direct Link To This Post Posted: 19 Feb 2012 at 9:24am
If you read the post clearly I did post that most require you save, meaning that some don't, your credit union is obviously one that does. Also what you forgot to mention is the opening hours of your union? what are they? and how many days are they open?
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Post Options Post Options   Thanks (1) Thanks(1)   Quote amanda Quote  Post ReplyReply Direct Link To This Post Posted: 19 Feb 2012 at 2:37pm
open six out of seven. Also u said u had to visit the credit union with id to join, again for many credit unions this is not true. Many have websites that allow appictaions, u are then checked electronically and its all done in minutes. We accept posted, peronal and web applications.
 
I would suggest anyone looking for info on credit unions: look them up in ur local phone book, check ABCULs site for your local ABCUL credit union. Remember ABCUL is the largest but not the only UK credit Union Trade assocciation but does cover some 415 credit unions.
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Post Options Post Options   Thanks (1) Thanks(1)   Quote amanda Quote  Post ReplyReply Direct Link To This Post Posted: 19 Feb 2012 at 2:46pm
1st Alliance (ayrshire) is open to all who live or work within the county of Ayrshire,
 
Scotwest, intenet and phone based, is open to anyone in the west of scotland.
 
There are two main types of Credit Unions,  Community based and industrial
 
Community based are as the name suggests based in the community they cover, they will have point the their area for members to access the services, as well as telephine and interent.
 
Industrial, usually do most of their work online and telephone.
 
We are set up to offer services for more that just savings and loans: we deal with ppl facing hard times as well as a alternative to banks for loans AND Banking!
 
Some Credit unions even offer morgtages!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote WongaWoman Quote  Post ReplyReply Direct Link To This Post Posted: 19 Feb 2012 at 2:51pm
Amanda,

Thanks for the information.
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