WHAT ARE LOANS?
Loans are monetary advances which our credit union grants to its members for provident and productive purposes. There are five categories of loans: Ordinary loans, Two-to-One loans, Cash Revolving Facility (CRF), Manager’s Loans and Mortgage loans.
These are loans which members borrow at an interest rate of 1% on the declining balance otherwise described as the outstanding or unpaid balance of the loan. Ordinary loans are granted to the maximum of one and half times of the member’s existing share balance. These loans can be accessed up to a maximum amount of $200,000. It means that a member will need to have shares of $133,333 to borrow the maximum ordinary loan of $200,000. The portion of an ordinary loan that exceeds the member’s shareholding is unsecured and is considered to be granted on the basis of the character of the member.
These loans are granted at an interest rate of 1½% on the declining balance otherwise described as the outstanding or unpaid balance of the loan. Two-to-One loans are granted to a maximum of twice the existing share balance of the member.
Note: The maximum value of this loan that can be borrowed is $200,000. A member needs to have $100,000 in order to access the maximum of this loan category.
CASH REVOLVING FACILITY (CRF)
This type of loan is granted to members to meet short term cash emergencies. It is a stand-alone loan since it is not added to any existing loans a member may be carrying.
These loans carry a service charge of 10% of the principal which can be a maximum value of $2,000.
A Manager’s loan is a facility which the Manager of our Society has been authorized to administer. It involves the granting of short to immediate type loans to members to meet emergencies. The maximum loan which the Manager, as a loans officer, can grant to a member is $10,000.
Unlike the CRF, this type of loan is added to any existing loan. A Manager’s loan is granted at the interest rate which the member is carrying on his/her existing loan.
These are loans which are provided to members to assist them with the purchase of real estate (i.e. house and/or land) or to assist with the repair of a house. These loans are granted also to assist members with the purchase of motor vehicles.
The maximum value of a real estate mortgage loan is $350.000; for a vehicle mortgage loan it is $200.000. A Members must have 30% of unencumbered shares to access the value of the mortgage loan for which he/she is applying.
In the case of motor vehicles a member will need to have 25% of the mortgage loan for which he/she is applying. All mortgage loans carry an annual interest rate of 8%.
SPECIAL LOAN CONDITIONS
In all categories of loans, except CRF and Manager’s Loans, the Credit Committee can increase the maximum loan value on the approval of the Board of Directors. Real estate mortgage loans are granted to a maximum of $700,000 at an interest rate of 6% on the declining annual balance.
Loans taken with our credit union are covered by the Loan Protection Plan which is an insurance product of CUNA Caribbean Ltd. This plan guarantees that in the event of death, CUNA will repay the outstanding balance of the loan owed by the deceased member.
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