Islay and Jura Credit Union

Taking Out a Credit Union Loan

Islay & Jura Credit Union charges interest at the rate of 12.68% APR, charged at 1% per month on the reducing balance.  This rate will not increase, no matter what happens to bank interest rates!

Unlike most banks, Credit Union loans come with no hidden charges and no penalties for repaying the loan early.  For members up to the age of 80, life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, insurance would repay the loan for you.

Although you may withdraw your shares at any time, it is to your advantage to take out a Credit Union loan instead.  That way, you still have your savings and the life insurance which automatically goes with them.   The Credit Union encourages members to continue adding to savings while repaying a loan.

There are two types of loan, secured and unsecured.  A secured loan is for an amount up to the value of your shares (your savings in the Credit Union).  Secured loans must be repaid within a maximum period of seven years.  An unsecured loan is a loan for more than the value of your shares, and it has to be repaid in no more than three years.  Unsecured loans are granted at the discretion of the Credit Committee, in accordance with the rules of the Credit Union.

The Credit Union has no minimum loan amount, meaning you can borrow a much smaller sum than you could from most banks.

To be eligible for a loan, you must be over 18 and have been a member of the Credit Union for at least twelve weeks.   You will be expected to have been saving regularly over that time.  The amount you can borrow depends on the amount of your savings.  For a first loan, you can apply to borrow up to one-and-a-half times the amount you have saved.  After you have successfully repaid this loan, you may apply to borrow up to twice your share balance (savings).  The maximum loan the Credit Union can offer is £5,000.

To apply for a loan, you must complete a simple application form, available from the Collection Points, or you can print one from our forms page.  The form includes a health declaration, which you must sign to say you are in good health.  If, however, you do have health problems, you will also need to complete a brief medical form.  This is nothing to worry about, as its only purpose is to ensure your loan is properly covered by our insurance.  The form is kept confidential and will be destroyed at the end of the loan period.  You will not be refused a loan because of ill health.

Repaying Your Credit Union Loan

Doorstep lenders may seem to offer a convenient solution when you need money, but the interest rates they charge can be very high, with some companies charging over 400% APR!

When you apply for your loan, you are asked to state how much you can afford to repay, per week, per fortnight or per month.  You should not set this level too high.  There is no penalty for paying off a Credit Union loan early, so if you find you are able to pay a little extra sometimes, you are free to do so.  You can arrange to make your repayments at a Collection Point, or by Standing Order.

Islay & Jura Credit Union charges interest at the rate of 12.68% APR, charged at 1% per month on the reducing balance.  If you pay weekly or fortnightly, there is a simple table inside the Pass Book which will enable you to calculate the interest payable each time.  If you pay monthly, by Standing Order or at a Collection Point, the calculation will be done for you when your application is processed.

If you would like to see how our interest rates compare with other lenders in this area, please visit www.lenderscompared.org.uk.

A longer repayment period will mean more interest is payable on the loan than if it were repaid over a shorter period, but the amounts of interest are so low that this need not be a worry.  For example, a loan of £100.00 repaid at £10.00 per week plus interest would be repaid in ten weeks, with a total of £1.28 interest paid.  The same loan repaid at £5.00 plus interest would take twenty weeks to pay off, with a total of £2.46 interest paid.  At a repayment rate of £2.00 plus interest, the loan would be repaid over fifty weeks, but the total interest paid would be just £5.94.