A new, national survey has revealed that the vast majority of people who plan on borrowing money in 2019 will go to a credit union. The study of borrowing habits among 1,000 adults in Ireland found that one in four plan on borrowing money this year. 74% of these will go to the credit union. Banks were in second place as the lender of choice, but came in far behind the credit union at just 17%.
Of those planning to borrow, more than a third will take out a car loan. A quarter will take on a home loan, while 16% will borrow to go on holiday or travel. 9% will borrow to fund third level education and 5% will borrow for their wedding.
Borrowers will take out an average loan of €8,558. The majority (42%) plan on paying the money back over 3 to 5 years.
Commenting on the results, Michael Duffy (Chairman) St. Columba’s Credit Union said: “It’s encouraging that people are taking a prudent approach to borrowing in the year ahead, despite the healthy recovery in the economy. Of those who do plan to borrow, we are of course delighted to see that a significant majority plan to go to their credit union. This does not come as a huge surprise to us, because at St. Columba’s Credit Union, like all credit unions, we are ethical lenders that offer fair and affordable loans to our members. We are always happy to work with each member individually to structure loan repayments in a way that works best for their individual circumstances.”
Michael continued: “For example at the moment we are offering our Home Renovation loan with a very affordable 6.7% APR**. The loan is typically approved within a few days and, as with all of our loans, does not carry any hidden fees or additional administration charges. We are happy to offer this loan to existing members, those members we may not have seen for a while or who’s membership might have lapsed, and of course those in our local community who have yet to become members and may be new to the idea of the credit union.”
The survey also found that affordability of monthly loan repayments stands out as the deciding factor in people’s choice of lender (36%). Less than a quarter (23%) said the APR rate was the most important factor for them. 15% said confidence in knowing their loan would be approved would dictate who they would borrow from.
Michael said “This finding may point to a lack of understanding among borrowers of how much the loan is actually costing them. Borrowers may be focusing on the cost of monthly repayments, rather than the true, total cost of credit. A focus on monthly repayments can make higher cost loans, such as moneylender loans, appear more attractive to borrowers. However, they will end up paying back more in the long run because of the much higher APR rates. Our advice to anyone planning to borrow in 2019 is to talk to us first at St. Columba’s Credit Union before making any decision. We are firm believers in financial education here and our friendly staff are always happy to take the time to provide a straightforward explanation of lending terms and conditions.”
* Survey findings from a national survey of 1,000 adults in Ireland commissioned by the Irish League of Credit Unions and carried out by independent market research company, iReach Insights, in December 2018.
** For a €15,000, 5 year variable interest rate loan with 60 monthly repayments of €293.49, an interest Rate of 6.5%, a representative APR of 6.7%, the total amount payable by the member is €17,607.27. Information correct as at 22/01/2019.