1.1 Loans are available to members aged 18 and over who have saved for a minimum of 8 weeks (2 months).
1.2 Loans will only be issued to members who can demonstrate an ability to meet the repayment level as stated in their agreement with the Credit Union.
2. Application and Approval
2.1 All loan applications must be made on the Dumbarton Credit Union Ltd Loan Application Form.
2.2 Members should complete and sign the application form however, if necessary, assistance can be provided with its completion. An agreement form confirming assistance must be signed by applicant. An applicant may be interviewed if required. Where a member submits their application on-line they will be asked to sign the application form when they attend for interview or to collect the loan.
2.3 Waiting Periods may be implemented in relation to the payment of loans and if in operation will be advertised within the Credit Union Office and on-line.
2.4 All secure loans can be approved by one loan officer who shall set the repayment terms and conditions for the loan. Loans which are fully within policy can be approved by loan officers.
2.5 All other loan applications shall be referred to the Credit Committee for decision. Only the Credit Committee/Loan Officers are authorised to assess and make decisions on all loans.
2.6 If a loan application is rejected the Credit Committee shall advise the member by letter.
2.7 All non-secure loans require two authorised signatories for approval.
2.8 All loans other than secure loans can, at the discretion of the Credit Committee, be subject to a credit check. All loan applications for a sum of £5,000 over share balance, unless secure, shall be the subject of a credit check unless a credit check was carried out by Dumbarton Credit Union in the last six months.
3. Loan Limits
3.1 All applicants may be subject to a credit check.
3.2 The maximum available for a first loan will be up to twice the member’s shareholding. If shares are over £2,000 a member may apply for up to £2,000 more than the shares value. Secure loans are not subject to the loan limit.
3.3 The maximum available for second and subsequent loans will be three times the member’s shareholding.
3.4 Members who have been with the Credit Union as an adult member for three years or more and have a proven history of repaying loans within their agreement are not subject to the three times loan limit. Their borrowing limits are based purely on their ability to repay. Proof of income must be submitted with loan application or the loan will not be considered. The maximum loan available in these circumstances will be £20,000.
3.5 Loans to members over 79 are approved on a secure + 25% basis only with the credit union taking liability for the 25% and the loan being repayable over a maximum of 2 years.
3.6 Members are advised that the loan limits are the maximums for which they can apply but that these are not an entitlement. The actual amount of loan offered will be the decision of the Credit Committee.
3.7 If a member's loan is approved and they are advised that before applying for their next loan they must reduce their balance 'substantially' this means by at least 50%.
4. Repayment Terms
4.1 The maximum repayment period for all first loans is two years.
4.2 There is no minimum loan repayment period however the Credit Committee will require to consider if the member has established a Credit Rating with the Credit Union if the repayment period is over a very short time. If this is not the case the Credit Committee will restrict the next loan application to first loan limits.
4.3 The maximum repayment period for second and subsequent loans shall be five years for unsecured loans and 10 years for secure.
4.4 Repayments shall be at a level and frequency agreed between the member and the Credit Committee. The Credit Committee will have the final decision on the repayment level offered to a member.
5. Interest Rate
The interest rate charged on loans are as follows:-
up to £7,499 - 1% per month on the reducing balance of the loan (APR = 12.7%).
£7,500 to £9,999 - 0.75% per month on the reducing balance of the loan (APR = 9.4%)
£10,000 to £20,000 - 0.58% per month on the reducing balance of the loan (APR = 7.2%)
6.1 Dumbarton Credit Union holds a member's shares as security against loans issued by the Credit Union. The Credit Union can transfer the member's shares to cover arrears (including interest payments) at any point of the loans default. The shares in the member's account at the point the loan is approved cannot be withdrawen when the loan is greater than the share balance. Where the share balance is higher than the loan balance the member can withdraw shares. In this circumstance the member can only withdraw those shares in excess of the loan balance.
6.2 During the loan period the member must save an agreed amount to their share account. A member may withdraw the new shares paid into their account after the date the loan was processed. A member must be made aware of the consequence to the share insurance protection when withdrawing the new shares.
6.3 “Share-loading” is the term given when a member deposits a large sum over and above their normal savings to attract a higher loan. These deposits will only be included for loan purposes when they have been in the member’s account for not less than eight weeks.
7. Top-up Loans
7.1 Top-up loans are available to members on second and subsequent loans by the approval of the Credit Committee and subject to the availability of funds. All top-ups are restricted to balance of previous loan.
7.2 Loans which are in arrears or have been re-negotiated due to severe arrears contacts are not eligible for top-ups.
8. Loan Life Insurance
8.1. Loan life Insurance, subject to a Pre-existing Condition Limitation is provided free for all members aged 18 to 79.
9. Loan Issue
9.1 All loans will be issued via a cheque made payable to the member or their nominated recipient.
9.2 Secure loans are paid out immediatley via cheque. Where funds are available within the Credit Union the member can receive cash on condition they countersign the back of the cheque.
9.3 Emergency loans will be considered and if funds are available they will be paid out immediately.
9.4 Arrangements can be made to annotate the cheque which allows a member to collect cash at the Bank of Scotland, 94/102 High Street.
Approved by the Board of Directors on the 11th August 2015 and is subject to annual review.