Dumbarton Credit Union Ltd Loan Policy
Dumbarton Credit Union Ltd
Loan Policy
1. Eligibility
i. Loans are available to members aged 18 and over who have saved for a minimum of 8 weeks (2 months).
ii. 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
i. All loan applications must be made on the Dumbarton Credit Union Ltd Loan Application Form.
ii. Members should complete and sign the application form however if necessary assistance can be provided with its completion. An applicant may be interviewed if required.
iii. Waiting Periods may be implemented in relation to the payment of loans and if in operation will be advertised within the Credit Union Office.
iv. All secure loans can be approved by one loan officer who shall set the repayment terms and conditions for the loan. All other loan applications shall be referred to the Credit Committee for decision. Only Credit Committee/Loan Officers are authorised to assess and make decisions on all loans.
v. If a loan application is rejected the Credit Committee shall advise the member in a letter.
vi. All non-secure loans require two authorised signatures for approval.
3. Loan Limits
i. The maximum available for a first loan will be up to twice the member’s shareholding. Secure loans are exempt and if shares are over £1,000 a member may apply for up to £1,000 more than the shares value.
ii. The maximum available for second and subsequent loans will be up to three times the member’s shareholding subject to a ceiling of £7500. Applicants may be subject to a credit check.
iii. Members who have been with the Credit Union as an adult member for 3 years or more and have a proven lending history are not tied to the three times loan limit. Their borrowing limits are based purely on their ability to repay and may be subject to an external credit check. If the amount requested is £5,000 or more they will be subject to an external credit check. The maximum loan available in these circumstances will be £15,000.
iv. 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.
4. Repayment Terms
i. The maximum repayment period for all first loans is two years.
ii. 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 the case the Credit Committee will restrict the next loan application to first loan limits.
iii. The maximum repayment period for second and subsequent loans shall be five years for unsecured loans and 10 years for secure.
iv. Repayments shall be at a level and frequency agreed between the member and the Credit Committee.
5. Interest Rate
The interest rate charged on all loans is 1% per month on the reducing balance of the loan (APR = 12.68%).
6. Shares
i. A member’s shares are held as security against loans issued by the Credit Union and can be taken at any point if loan defaults.
ii. During the loan period the member must save an agreed amount to their share account. A member may access 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.
iii. “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
i. 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.
ii. Loans which are in arrears are not eligible for top-ups.
iii. The top-up will be a maximum of the difference between the present loan balance and the figure which would be available under the normal ratio rules or to a figure agreed by the credit committee under the capacity lending rules.
8. Loan Life Insurance
i. Loan life Insurance, subject to a Pre-existing Condition Limitation is provided free for all members aged 18 to 79.
9. Loan Issue
i. Emergency and fully secured loans will be paid out immediately subject to the availability of funds.
ii. All loans will be issued via a cheque made payable to the member or their nominated recipient.
iii. 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 8th August 2010 and is subject to annual review.
Secretary:
Dumbarton Credit Union Ltd
Loan Policy (Growth Fund)
1. Eligibility
i. Loans are available to prospective and existing members aged 18 and over.
ii. Loans will only be issued to applicants who can demonstrate an ability to meet he repayment level as stated in their agreement with the Credit Union.
i. All applicants may be credit checked through Equifax.
ii. All applicants should meet Growth Fund criteria.
2. Application and Approval
i. All loan applications must be made on the Dumbarton Credit Union Ltd Loan Application Form.
ii. Members should complete and sign the application form however if necessary assistance can be provided with its completion. All applicants will be interviewed.
iii. Waiting periods may be implemented in relation to the payment of loans if insufficient funds available at the time of application.
iv. All loans will be considered by the Credit Committee who shall set the repayment terms and conditions for the loan. All loans require two signatures for approval. Only Credit Committee/Loan Officers are authorised to assess and make decisions on all loans.
v. If a loan application is rejected the Credit Committee shall advise the member in a letter..
3. Loan Limits
i. The maximum available loan for a first loan will be up to £200.00 or a larger amount at the discretion of the Credit Committee may be applied for.
ii. Second and subsequent loans will be at the discretion of the Credit Committee.
4.Repayment Terms
i. The maximum repayment period for all first loans is two years.
ii. 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.
iii. The maximum repayment period for second and subsequent loans shall be five years.
iv. Repayments shall be at a level and frequency agreed between the member and the Credit Committee.
5. Interest Rate
i. The interest rate charged on the first loan is 2% per month on the reducing balance of the loan (APR = 26.8%). On all subsequent loans the interest charged will be 1% per month on the reducing balance of the loan (APR = 12.68%).
6.Shares
i. A member’s shares are held as security against loans issued by the Credit Union and can be taken at any point if loan defaults.
ii. During the loan period the member must save an agreed amount to their share account. A member may access the 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.
iii. “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
i. 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.
ii. Loans which are in arrears are not eligible for top-ups.
ii. The amount of top-up will be at the discretion of the Credit Committee.
iv. The applicant will be encouraged to transfer to Loan 1 status for future loans using the normal ratio rules for second and subsequent loans..
8.Loan Life Insurance
i. Loan life Insurance, subject to a Pre-existing Condition Limitation is provided free for all members aged 18 to 79.
9.Loan Issue
ii. Emergency loans will be paid out immediately subject to the availability of funds.
iii. All loans will be issued via a cheque made payable to the member or their nominated recipient.
iv. 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 8th of August 2010 and is subject to annual review.
Secretary:
| 
25 May 2013
