Loan Policy

1. Loans shall be made for provident or productive purposes only and in accordance with the rules of the Credit Union.

2. Loans are normally granted on a maximum 4:1 loan to share ratio after six (6) months of membership, except in the following cases:

a) Where the Credit Union is offering Monthly Loans Special

b) Where there are open periods for new members to access loans

c) Where externally generated funds are used

d) Special Loan Product Offering

3. Loans shall not be granted for down payment on Hire Purchase transactions.

4. Loans shall not be granted to delinquent members, or co-makers of delinquent members.

5. Members who have saved regularly with the Credit Union shall be eligible for loans as follows:

a) Membership up to six (6) months – within shares and savings. Where applicable (2a-2d above), members may borrow in excess of shares and savings at a special loan rate

b) Membership over six (6) months – four (4) times shares, except where 2a-2d applies.

c) Membership after nine (9) months in the SMART PAC Savings Programme – four (4) times shares.

6. Loans under the SMART PAC Savings Programme shall be for educational purposes only.

7. Fixed Deposits may not be used to qualify for a loan; however, it may be used as collateral.

8. For Premium financing, a deposit to shares representing 20% of premium is required. The Credit Union will finance 100% of premium, repayable over nine (9) months at a special loan rate.

9. Verification of income e.g. last two (2) pay slips, are required for all loans above shares. The Credit Union reserves the right to request additional information.

10. The maximum repayment period of a loan shall not exceed five (5) years.
Some exceptions are listed below:

a. Loan within shares, deposits and savings in C.U. – 15 years

b. Loans using funds in other approved institution as security – 5 years

c. Real Estate purchase (and affiliated costs) for members primary residence – Where a member is offering a first (1 st ) mortgage on property or a pari passu arrangement with NHT or a Building Society, the Credit Union may extend loan for a period not exceeding twelve (12) years.

d. Other loans for which the Credit Union will hold first mortgage on property – 10 years

e. Home improvement – 12 years

f. Loans for motor vehicles 0-1 year – 8 years

g. Loans for motor vehicles 2-3 years – 7 years

h. Loans for motor vehicles 4-5 years – 5 years

11. SECURITY

a) Co-makers are required to have unencumbered (free) shares which will be hypothecated.

b) All items offered as security must be fully insured and the Credit Union must be satisfied as to arrangements in place for future payments of premium

c) Motor vehicles may be used as security, provided that the vehicle will continue to get comprehensive insurance until loan has expired. The percentages used (except where these vary for Loans Specials are outlined below:

New vehicle - 75%

1 year - 70%

2 years - 65%

3 years - 60%

4 years - 55%

5-7 years - 50%

(The Credit Union reserves the right to request an engineers report)

d) For mortgage financing, or where a registered title is offered as security, the

security must be a first (1 st ) or second (2 nd ) mortgage on property.

Approval Limits:

Credit Officer: Loans up to $300,000 above shares, deposits and savings

General Manager: Loans up to $500,000 above shares, deposits and savings

In-house Loans Committee: Loans up to $1,000,000 above shares, deposits and savings

Credit Committee: All loans

List Of Acceptable Securities

1. Members' savings and deposits in Credit Union.

2. Hypothecation of savings and deposits in other Credit Unions and other financial institutions deemed acceptable by the Credit Union, where such savings and deposits are transferable during the period of the loan.

3. Unencumbered shares of members of the Credit Union. Hypothecation must be confirmed in writing before disbursements.

4. Motor vehicles not older than eight (8) years. Motor vehicle MUST comprehensively insured on an “open policy” basis.

5. Letter of undertaking from other lending institutions deemed acceptable by the Credit Union, to remit proceeds of an approved loan directly to Credit Union.

6. First legal mortgage on unencumbered title. A second mortgage may be taken where first mortgagee agrees to protect the interest of the Credit Union and where the Credit Union will not be at risk.

7. Assignment of fifty percent (50%) Cash Surrender Value (CSV) of life insurance policies owned by member.

8. Guarantee deposits.

9. Life insurance over CUNA Mutual limit or other arrangements deemed acceptable by the Credit Union.

10. Assignment of up to seventy (70%) of Receivable payable to the Credit Union upon satisfactory evaluation and acceptance of legally binding charge by the payee.

11. Guarantee from employer, bank or other organization deemed acceptable by the Credit Union, subject to assessment of latest audited Financial Statements and examination of Certificate of Incorporation, Articles and Memorandum of Association and any other documents required by the Credit Union.

12. Assignment of fixed assets and/or stocks upon satisfactory professional assessment and deemed acceptable by the Credit Union.

13. Fifty percent (50%) of the professional valuation of precious gems and metals up to a maximum security amount of Fifty Thousand Dollars ($50,000.00). Items MUST be in the safe keeping of the Credit Union and fully insured until expiry of loan.

Requirements for Motor Vehicle Loans

1. Letter from vendor/pro-forma invoice
2. Certificate of Fitness, Registration or Bill of Entry, and Motor Vehicle Title
3. Last 2 pay slips
4. Security – Be reminded that only a percentage of the value of the vehicle is used as security.

Valuation reports are accepted from any of the three (3) companies listed below:

• Trans Jam Loss Adjuster, 4 Chelsea Ave, Kgn 10
• MSC McKay, 27 Lady Musgrave Road, Kgn 10
• Automotive Valuations & Consultants, 28 Haining Road, Kgn 5

5. Quotation from insurance company re cost to comprehensively insure vehicle.

Know how to calculate the security on your loan. Your shares and additional security should equal to your total loan.

Example
For a loan of $30,000.00 with shares of $10,000.00, you will require additional security to cover the exposed amount of $20,000.00

Shares + other security = total loan

After the loan is approved, you will be required to pay a Security Registration Cost

Loan Forms:

Download Loan Application Form