A GUIDE TO SAFE BORROWING

Factsheet 12

For further information contact Mind Your Money on 0161 227 1352

A GUIDE TO SAFE BORROWING

…

Every now and again we may need to borrow money, be it a large amount for a major purchase or a smaller amount for Christmas presents, something for your home or a holiday.

Borrowing money is always a risk but there are lots of ways to avoid the pitfalls.

Although it isn’t wrong to borrow money, the trick is to know where and how to borrow safely and without too many risks.

How do you avoid the risks??

By asking yourself a few questions before applying for a loan…



- Are there other ways that you can get the money you need? - Can you take on extra hours at work or a part time job? - Can you borrow it interest-free from a family member?

- Do you really need the item now or can you put off buying the item so that you can save up for it instead?

- Can you buy the item cheaper elsewhere?

- Can you find the money you need by adjusting your weekly spending?  Can you afford to pay the loan back?

- Is your income or job secure? You should always consider what might happen in the future before agreeing to a long-term repayment plan.

- Loans always come with interest added and often a hefty charge for setting the loan up in the first place. Always ask for and compare the different rates and charges and think whether you need to take insurance with the loan. The insurance is often added to amount you lend which will then increase the total amount you pay and make your repayments higher too. You do not have to take out the insurance to be guaranteed the loan

Factsheet 12

For further information contact Mind Your Money on 0161 227 1352

EXAMPLES OF LOAN AMOUNTS

Doorstep Lender Lender Amount of

loan

Typical APR

Term of loan (weeks)

Weekly repayment

Total repayment

Total interest

Total saving Doorstep

lender

£300 272% 52 £10.50 £546 £246 - Credit

Union

£300 38.5% 34 £10 £333.86 £33.86 £212.14

Pay Day Loan Lender Lender Amount of

loan

Typical APR Term of days

Total repayment

Total interest Total saving Pay-day loan

lender

£300 4214% 30 £397.19 £97.19 - Credit Union £300 38.5% 238 £333.86 £33.86 £63.33*

*This example shows a typical loan term for a £300 loan, however if the loan were repaid within 30 days, then the interest charged would be only £8.25!

Borrowing

money isn’t always the answer…

If you are thinking of borrowing money to pay off existing debts… STOP!!

There are many local advice agencies offering FREE help to manage debts. Work at your budget and look at ways to make reduced offers on your debts to your creditors. Often through advice such as this, people are able to avoid further lending. Do not agree to take out a loan without first looking at your finances to see if you can

afford the payments. If you’re not sure, get advice.

Advisors will also look to help people cover unexpected costs through grants or charity applications

MONEY ADVICE SERVICE -0300 500 5000

www.moneyadviceservice.org.uk

SHELTER - 0344 515 1640

http://england.shelter.org.uk/

NATIONAL DEBTLINE - 0808 808 4000

www.nationaldebtline.org

CITIZENS ADVICE BUREAU – 08444 111 222

Insurance Cover

All members’ loans and savings are insured at no direct cost to the member This is called Loan Protection and Life Savings insurance (LP/LS)

When you join the Credit Union you fill in a Nomination form, which tells us who you have chosen to be your beneficiary. It does not have to be your next of kin and can be more than one person. It can be changed at any time.

Life Savings Insurance

In the event of your death or total and permanent disability, deposits made before your 65th birthday will get 100% cover. Anything deposited between the ages of 65 and 80 will get 25%.

Example

Savings (Shares) Insurance To next of kin

Deposited up to age 65 £1,000 100% = £1,000 £2,000 Deposited after age 65 £500 25% = £125 £625

Total savings £1,500 Total Insurance £1,125 Total paid out £2,625

The amount of insurance depends upon your age when your savings were put in the credit union, not upon the age you are when you die, providing they have been left in the credit union during that time.

In addition your dependants will also receive Accidental Death and Dismemberment Cover. This pays up to an additional 100% of the value of your shares in the event of your death caused by an accident prior to age 65.

Loan Protection Insurance

All members under the age of 75 years have FREE loan protection insurance.

In the event of your death, any outstanding loan would be paid off in full.**(Maximum £5000) However, there is a 6 months Pre-existing Condition Limitation.

This means that if someone dies within 6 months of taking out the loan, of a condition that they already knew about, the insurance would not pay out.

If a member dies within 6 months of taking out a loan, unexpectedly, or from something they did not know about, then the loan would be paid off in full.

Date input ………

Application for Membership

Title______ Name_____________________________________________________________ Address_____________________________________________________________________ ___________________________________________________Postcode_________________ Name of Landlord (if rented accommodation)________________________________________ How many years at this address?_________ (If less than 3 years please give previous address) ____________________________________________________________________________ Contact Details: Home Phone ______________________ Mobile ______________________ Email _______________________________________________________________________ Date of Birth_____________________ N.I. Number _________________________________ Occupation___________________________________________________________________ Employers Name: ___________________________ Work Phone ______________________ Employers Address____________________________________________________________ Do you currently have an active bank current account? YES / NO (If no, please ask for advice on how to access your member share account)

____________________________________________________________________________

I hereby apply for membership of and agree to abide by the rules of MANCHESTER CREDIT

UNION LIMITED, and declare that the information given by me on this form is true and correct to

the best of my knowledge and belief.

I agree to a membership fee of £3 being deducted from my account around 30th September each year.

Applicant’s signature_________________________ Witnessed by ______________________ Where did you hear about Manchester Credit Union? _________________________________

IDENTIFICATION

1. (ID)_________________________________Seen by ___________ _____ Copy taken Y/N

2. (Address 1)___________________________Seen by _______________ Copy taken Y/N

3. (Address 2)___________________________Seen by ___________ _____ Copy taken Y/N

Form of Nomination / Beneficiary

I,

____________________________________, living at _____________________

_____________________________________________________

a member of this

credit union hereby nominate

__________________________________________

living at

____________________________________________________________

__________________________________________________________________

as the person to whom there shall be transferred at my decease such property in the

credit union as may be mine at the time of my decease, whether in shares or

otherwise.

Relationship to you

___________________________________________________

Contact Telephone Number

____________________________________________

Applicant’s Signature

_________________________________________________

Witness

____________________________________________________________

(The witness shall not be the nominee)

Are you?

White British Black British Irish White & Black Caribbean White & Asian Other Mixed Indian White & Black African Pakistani Bangladeshi Other Asian background Other ethnic background

List 1

Please provide one of the following

(if you are unable to provide one item from List 1, please provide two items from List 3)

List 2

Please provide two items from the list below

*Items must be dated within the last 12 months

**Items must be dated within the last two months

List 3

Photo Id: -

Unexpired passport

Unexpired UK/EEA (or Switzerland) photocard driving licence (the date of the licence and photograph must

be in date).

EEA or Switzerland national identity card.

Northern Ireland voters card.

UK ID card for foreign nationals.

Employee Photo ID

(Only taken on-site at Staff Sign-Up days, or via remote application if payroll member)

Proof of address: -

Unexpired UK/EEA (or Switzerland) photocard driving licence (the date of the licence and photograph must be in date and current address).

HMRC (Inland Revenue)

coding/assessment/statement/tax credit* (not P45/P60s).

Bank statement**

Utility bill (not mobile phone or satellite/cable TV)**. Credit card statement**.

UCAS letter (students only)*.

Local council rent card or tenancy agreement*. HMRC (Inland Revenue) correspondence including name, address and permanent NI number*. Pension/benefit correspondence from the DWP*. Instrument of a court appointment e.g. Probate or Court registered Power of Attorney.

Wage Slip

(Only taken on-site at Staff Sign-Up days, or via remote application if payroll member)

Alternative proof of identity: -

Birth certificate.

NHS medical card.

Adoption certificate.

National Insurance Card

LOAN APPLICATION

N.B. Up to date proof of all income entered on this form is required at time of application

Membership Number ... National Insurance Number ... Title ... Surname ...First names ... Maiden / Previous names ... Address... ... ... ... Postcode...

How long at this address? ...

If resident here less than 3 years give previous address ... ... ... ... How long at this address? ...

Date of birth ... Marital status ... Telephone number (Home) ... Mobile ... Email ... Number of children under the age of 19 ...

Children’s D.O.B ... ... Residential status: Owner occupied / Private rented / With parents / With family or friends /

Local Authority rented / Housing Association rented ... NEAREST RELATIVE (Who does not live at your address)

Name...Address ... ... ... Telephone Number... Relationship to you...

Please note it is your responsibility to inform Manchester Credit Union of any change in circumstances.

CREDIT HISTORY

Have you ever been declared Insolvent, Bankrupt or involved in court proceedings for debt? Y / N

If yes please give details ... Disclosure will not automatically mean loan refusal.

Failure to disclose may result in refusal.

MCU may use credit scoring when considering your application and may search the fi les of credit reference agencies and may keep a record of the search. We may also carry out identity and anti-fraud checks. We may give credit reference agencies details of non-payment when we make a demand but do not receive satisfactory non-payment proposals.

Data Protection Act 1998

Your personal information will be treated as confi dential and only disclosed at your request, to our agents in managing your account, in the public interest, to prevent fraud or by order of the courts.

I submit this application for a Credit Union loan and declare the information herein to be true and accurate.

I also declare that I am / am not in good health and that I do not require medical treatment / take regular medication for: ………...………...

Signature ... Date .../.../...

Documents Accepted by ... Branch/Collection ...

Your questions answered

It is important that repayments for this loan are made exactly in accordance with this agreement e.g every week / month. if for any reason you are unable to make payments on the due date it is important that you contact the Credit Union in advance. Administration charges may become payable should the Credit Union need to take action for recovery of any debt.

Who can apply for a loan? Any member of the Manchester Credit Union aged over 18 - Please see lending guidelines

How much can I borrow? Our staff will review your income and expenditure from you application form and will ensure that you can afford to repay what you borrow. It is therefore very important that your application form is fully completed.

How do I repay the loan? You can pay by standing order directly from your bank or buidling society. It may be easier for you to have some / all of your benefi ts or salary paid directly into the Credit Union so you dont need to worry about missing a payment.

How do I collect my money? Personally from one of our offi ces or collection points, as you will need to sign a loan agreement form.

ADDITIONAL INFORMATION Age ...Gender ...

Ethnicity: White British ° White Non-British ° Mixed °Asian or Asian British ° Black or Black British °

Chinese or Chinese British ° Other °

Benefi t Status: Working age benefi t ° Pension age benefi t ° No benefi t / other °

Household make-up: Applicant only ° Lone parent °Couple (no children) ° Couple with children °

Employment Status: Unemployed ° Self-employed ° Employed full time ° Employed part time ° Student ° Retired °

Incapacity ° Other °

Do you have a bank account? Y / N

Do you have a disability or long term illness? Y / N

Have you ever borrowed from a doorstep lender or loan shark? Y/ N

Loan Approved By:

1. 2. 3.

LOAN DETAILS

Purpose of loan ... ... Amount of loan £...

I can afford repayments of £...per week / month

I agree to save £...with each repayment (minimum £1 per week)

EMPLOYMENT DETAILS

Is this position permanent / temporary? If temp when does the contract end? ... How are you paid? Cash / Cheque / To bank account

How often are you paid? Monthly / Weekly

If you have been in your present post for less than 6 months please give previous Employer’s details: Previous occupation ... Employer’s name... ... Employer’s address... ... ... ... Date employment commenced .../.../...

If self employed, confi rm date established .../.../...

Proof of income seen... Copy taken? Y / N

INCOME WEEKLY

£

MONTHLY £

Salary / wages

Partner’s income

Pension

Benefi ts (i.e tax credits, DLA, child/b) Please state below

EXPENDITURE WEEKLY

£

MONTHLY £

Rent / Mortgage

Council Tax Electricity Gas Water Telephone Mobile Telephone Groceries Catalogues Credit Cards Hire Purchase Car Loan

Other Loans (inc credit union) Fares / Petrol

Car Insurance/MOT/Road Tax

Pension Savings Home Insurance Clothing/Shoes/School uniform Entertainment/ Socialising TV License

TV Rental Sky/Cable Childcare

School / Work meals

Prescriptions Pet Costs

Cigarettes

Magistrate court fi nes Maintenance

Other Totals