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IRISH LEAGUE OF CREDIT UNIONS LAUNCH RESULTS OF 2016 COST OF THIRD LEVEL EDUCATION STUDY
87% of parents (down from 94% in 2015) supporting their children financially through college, contributing €447 per month per child to cover costs of college
60% of parents will get into debt to fund third level education
Parents getting into debt to the tune of €4,300 in 2016 down from €4,670 in 2015
4% of parents say they will approach a moneylender to cover third level costs
Parents are saving for an average of 8 years for third level costs, saving on average €8,150
73% of parents really struggle to cover the cost of their child’s third level education
62% of family budgets have been adversely affected by the third level registration fee (marginal fall from 64% in 2015)
67% of students are extremely worried about finding suitable accommodation for the academic year
65% of students living at home compared to 62% in 2015, paying average of €376 on average in rent
Students living outside the home spending €1,048 euro per month, those living at home spending €530 per month
68% students work throughout the academic year to fund third level education, working on average 17 hours per week
Source: ILCU, 2016
Well done to our 2016 June Winners. Nora Kelliher was the winner of the car draw.
Well done to Nora Kelliher winner of the new Toyota Yaris.
Cash Prize winners
BACK TO SCHOOL COSTS 2016
Credit Unions say “Avoid Moneylenders, Shop Around, Plan a Budget”.
Research undertaken in June 2016 by the Irish League of Credit Union indicated that back to school costs negatively impact 26% of household bill payments with 13% of parents saying they will have to sacrifice spending on food to cover these costs.
School associated costs have increased year on year from 2012 with overall spend for primary children on average is €967 per year per child and secondary €1,474.
On average primary school parents are spending €145 on uniforms per child, secondary school parents spending €234 per child.
31% of parents find themselves in debt covering back to school costs, borrowing an average of €357.
In 2016 - 60% of parents will shop online for back to school items, up significantly from 47% in 2015.
79% parents expected to make ‘voluntary contribution to school averaging €118 per child, up from €112 in 2015.
37% of parents feel under pressure to buy branded school supplies, down from 42% in 2015, pressure more evident in secondary school parents.
Only 14% % of parents eligible for back-to-school allowance believe the back to school allowance is sufficient to cover school costs.
Speaking about the research, Helen Courtney Power, Business Development Officer with Killarney Credit Union said “we are very aware of the increased costs that families are facing when returning children to school after the holidays, we recommend that you plan early by making out a budget, shopping for deals in local retailers and avoid door step credit at all costs. We offer personal micro credit loans for smaller amounts which can be repaid through the household budget scheme or you can also look at our standard education loans for members” she concluded.
Its that time of the year, when you may be looking at different finance options for your new car. We are put together some information on hire purchase (HP) and personal contract plans (PCP) that you may heard about. We also compare both HP & PCP and a credit union loan.
You know the old saying; If it looks too good to be true…..
There’s a lot to be said for simplicity. For having a full understanding of the situation at hand. For not being confused or worrying about the small print or the hidden details.
Take buying a car. It used to be easy. You decide which car you want to buy, you find out the cost of buying it, perhaps the trade in value for your own car and then work out if or how much you need to borrow to pay for it. Simple.
For anyone who has tried to finance a car purchase in recent times, the process can be far removed from this. One emerging trend in car finance is the introduction of Personal Contract Plans (PCPs). Essentially a PCP is a lease scheme which makes financing a new car seem affordable for lots of us with low monthly repayments.
Here’s how it works:
Typically, a person will be offered a PCP package at the forecourt when buying a car.
The buyer will be asked to pay an initial deposit (usually between 10% and 30%) and then agree a monthly repayment – usually over the next three years. PCPs generally have low monthly repayments, which can make them seem more affordable when compared to other forms of finance.
The provider guarantees a minimum future value (MGFV) for the car taking into account depreciation and wear and tear. The MGFV is the amount you will have to pay to own the car at the end of the agreement. It is calculated by the finance company, based on its estimate of the future value of the car at the end of the agreement. It takes into account such things as, the car you are buying, length of agreement, the condition of the car at the end of the agreement and your annual mileage.
At the end of the term of the PCP, the buyer is left with 3 options....
• Pay a final payment (the minimum guaranteed future value or balloon payment) and keep the car.
• Hand the car back. Be aware that if you do opt to hand the car back, you don’t get anything from the car dealer for its value no matter how well you have kept it and maintained it and you might end up having to pay if you have not complied with all the terms and conditions.
• Put the car down as the deposit on another car and enter into a further PCP. It is important to be aware that the deposit you put down for the first car will not be available when you give the car back to use when taking out a new PCP. The equity you have built up in your monthly repayments and the difference of the MGFV is what you would have to put towards the new car. All you have to put towards the new deposit is whatever equity you built up from the first PCP. This equity may be less than the deposit required for rolling it over so you will need to top the deposit up each time.
With a PCP agreement, you don’t own the car, you are hiring it for a period of time, typically 3-5 years. You only own it when you make the final payment. This is important because if you were to run into financial difficulty during your PCP agreement, unlike a personal loan, you cannot sell the car to pay off your debt. These agreements are among the least flexible forms of finance. Because the payments are fixed for the term of the agreement, you cannot usually increase your repayments each month if you wish to do so. If you want to extend the term, you may be charged a rescheduling fee.
Before agreeing to a PCP make sure you always read the small print before you sign up. For instance, the cap on the number of miles/kilometres you are allowed to clock up over the period of the agreement. They may also request that you commit to certain car servicing requirements.
Always enquire about any additional fees and charges. You are entitled to a list of all additional charges and fees, so ask the garage for this before you sign up to any agreement. For instance, ask if there is any documentation fee for setting up the agreement, missed repayments fees or repossession charges.
Credit Union Car Loans
• Unlike a PCP you own the car from the outset
• You can sell the car on at any time
• You can borrow for the full amount
• There are no hidden fees, admin charges, transaction charges, set up costs or balloon payments
• The interest you pay on a credit union loan is the full cost of the loan so it is fully transparent
• Credit union interest rates are fair and reasonable and capped by law
• Repayments are calculated on your reducing balance, so you pay less interest with each repayment
• Your credit union loan is insured in the event of your death - subject to terms, conditions and eligibility criteria - at no direct cost to you.
• You can pay off your loan early, make additional lump sum repayments or increase your regular repayments, without a penalty. Other lenders may charge you extra for paying them back faster!
When comparing finance options, take the time to compare the total amount payable on a credit union car loan (cost of credit) with the PCP cost (the deposit, plus monthly repayments and final payment). Make sure you also compare the terms and conditions of each option.
An issue with a PCP is that it can restrict what you do with the car during the term. If you’ve taken out a credit union loan, then the car is yours to do with as you please. Drive as many miles as you please and crucially, sell it if you need to.
The way a PCP is structured can set up a situation where the easiest and simplest option is to roll over into a new car and a new plan. PCP\\\'s are, in effect, a way of trying to ensure that you will come back and buy another car from the same dealer or manufacturer. All well and good, but what if you don\\\'t like the brand of car or range they have to offer anymore? It does seem a little like saving money in the short term by spending more over a longer period. Our advise - read all the small print and be fully aware before you sign on the dotted line.
Why is a credit union car loan better?
When it comes to financing the purchase of a car, many people simply look for the lowest rate on offer and believe it to be the best option. Headline rates may attract the most attention, but the devil is very much in the detail. Many ‘car finance loans’ offered by garages and some banks are actually hire purchase agreements.
The main difference between using a personal loan and a hire purchase agreement to buy a car is that with a personal loan you borrow money, pay for your car, and own it immediately. With a hire purchase agreement, you don’t own the car until you make the final repayment. This means you cannot sell the car if you run into problems making your repayments.
If the motor dealer is arranging the hire purchase agreement, the motor dealer acts as an agent for a finance company and earns commission to arrange the finance for you. In this case, the motor dealer is acting as a credit intermediary and must be authorised to act on behalf of the finance company.
When you use a hire purchase agreement to buy a car, the motor dealer sells the car to the finance company. The finance company then rents the car to you for an agreed period of time in return for a set monthly repayment over a number of years.
Watch out for the range of additional fees and charges which you may incur as part of a hire purchase agreement. This would include a documentation fee (for setting up the agreement) and completion fee (a fee charged to end the agreement and pass ownership to the car purchaser). If you run into difficulty in meeting the terms of the hire purchase agreement, you may be charged a penalty fee for missed repayments, a rescheduling fee (if you need to change the terms of the agreement) and a higher rate of interest may be charged on any repayments which you missed.
The conditions of some hire purchase agreements result in monthly payments not being evenly spread out and you may pay less in the earlier months of the agreement. This can make your monthly repayments appear more affordable. However, you may have to pay a large final payment (known as a balloon payment) at the end of the term, a payment you may not have budgeted to meet. It can be a real sting in the tail for some.
Thankfully, a car loan from your local credit union is much more straight forward. Helen Courtney Power, Business Development Manager, Killarney Credit Union said \\\"You borrow the money from us, pay for the car and you own the car immediately. You agree a repayment schedule with us. If you run into difficulty, you can talk to us to see if you can come to an agreement on the repayment terms. Should you be in the happy position of being able to repay the loan early, you may do so without any penalty charges.\\\"
Having arranged finance with your local credit union in advance of going shopping for a car also puts you in a stronger position. It helps to know exactly how much you have to spend and because you are not going cap-in-hand to the dealer, you are effectively a cash buyer and you may be able to negotiate a better deal.
So if you’re thinking about your options for financing a car purchase, look no further than Killarney Credit Union with branches at Beech Road, Park Road and Kenmare.
Well done to our 2016 June Winners. Nora Kelliher was the winner of the car draw.
Cash prize winners:
Congratulations to our 2016 Members Draw Winners and our lucky car draw winner.
Patrick O Connor, Killarney who won a brand new Suzuki Swift GLX from Dermot Healy Motors.
Cash Prize Winners
Our next draw will take place in June, so why not apply today to join the members draw.
TRALEE & KILLARNEY CREDIT UNIONS LAUNCHES PILOT PERSONAL MICRO CREDIT PROJECT
SMALL AFFORDABLE LOANS TO BE MADE AVAILABLE TO THE THOSE ON SOCIAL WELFARE IN NORTH & SOUTH KERRY
SCHEME IS A DRIVE TO COMBAT MONEYLENDERS
17th November 2015
Tralee & Killarney Credit Union has today jointly announced the launch of a new Personal Micro Credit Project (PMC) which will be initially piloted in Tralee and Killarney area and in over 30 other credit unions across the country.
The project will be run in partnership with the Department of Social Protection, the Citizens Information Board, the Social Finance Foundation and An Post and is open to social welfare recipients. Those who would like to avail of this type of loan will need to join Tralee & Killarney Credit Union (if they are not already a member) and sign up for repayments to be made to the loan via the Household Budget Scheme which is run by An Post.
Speaking about the initiative Mark Murphy, CEO, of Killarney Credit Union said:
“We are delighted to take part in this pilot scheme. We are all well aware of the penal interest rates charged by moneylenders, both legal and illegal, in local communities. This pilot scheme will highlight that the credit union is a real option for people who are on social welfare in our area”.
Fintan Ryan, CEO, of Tralee Credit Union added
“The target audience for the scheme are those who are excluded from mainstream credit. Essentially, the aim is to offer small loans to those using or considering using a moneylending service. The project is working to create a realistic offering to counter the ‘convenience and ease’ advantage that moneylenders have in this country. An eligible person can apply for a loan of between €100 and €2,000. This type of loan will be distinct from a standard credit union loan” he concluded.
The Central Bank estimates that about 360,000 (2013 Report on Licensed Moneylending Industry) people are using moneylending services in the Republic of Ireland. This does not take into account those using unlicensed operators. Interest charged on loans from moneylenders can be 290% or even higher. The maximum interest rate which credit unions can charge is 12% (12.68% APR).
Credit unions have been particularly vocal throughout the recession years about the dangers of using moneylending services as in many cases, those who avail of this type of credit are getting trapped in a cycle of debt which is very hard to break free from.
Information on the pilot scheme will be available in Money Advice and Budgeting Services (MABS) and St. Vincent de Paul (SVP) offices which are in the vicinity of the participating credit unions.
Commenting on the initiative, John-Mark McCafferty, Head of Social Justice with the Society of St. Vincent de Paul, said:
“We have been advocating for an alternative to high cost moneylenders for some time and we warmly welcome the leadership shown by credit unions in the pilot to provide this product for people on social welfare who are eligible. We are working with our credit union colleagues locally throughout the pilot sites in order to ensure take-up of the scheme and more affordable credit for the households we assist”.
Notes to Editor
* The Household Budget Scheme operated by An Post is a scheme that helps those getting certain social welfare payments to spread the cost of some household bills over the year. Under the scheme, people who receive certain social welfare payments can pay regular amounts towards various household utility bills by direct deduction from their weekly payment. The customer can choose to have any amount deducted from their weekly payment subject to:
- a weekly minimum of €5 for each utility bill type, and
- the total payment must not exceed 25% of their weekly payment
For the PMC project, it is now being broadened to enable funds to be used to make repayments for a specific type of credit union loan.
The origins of the Personal Micro Credit Project date back to 2013 when discussions took place between the Citizens Information Board, MABS and the Social Finance Foundation (SSF) on the burgeoning moneylending industry in Ireland. A draft report was produced and sent to the Minister for Social Protection recommending that the introduction of a PMC scheme operated by credit unions, as an alternative to the moneylending industry.
A list of participating credit unions is available at https://www.facebook.com/itmakessenseloan