A GUIDE TO SAFE BORROWING

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1 Factsheet 12 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 Do you really need to borrow this money? - 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 For further information contact Mind Your Money on

2 Factsheet 12 Doorstep Lender Lender Amount of loan Doorstep lender Credit Union EXAMPLES OF LOAN AMOUNTS Typical APR Term of loan (weeks) Weekly repayment Total repayment Total interest Total saving % % Pay Day Loan Lender Lender Amount of Typical APR Term of Total Total interest Total saving loan days repayment Pay-day loan % lender Credit Union % * *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 SHELTER NATIONAL DEBTLINE CITIZENS ADVICE BUREAU For further information contact Mind Your Money on

3 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 65 th 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, % = 1,000 2,000 Deposited after age % = 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.

4 Membership No 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 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 30 th 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

5 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

6 Customer Identification Requirements for Manchester Credit Union 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) 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) 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 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) List 3 Alternative proof of identity: - Birth certificate. NHS medical card. Adoption certificate. National Insurance Card

7 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 nonpayment when we make a demand but do not receive satisfactory 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 How often should I make repayments? As agreed on your application. 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 Benefit Status: Working age benefi t Pension age benefi t No benefit / 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 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 Loan Approved By: Number of children under the age of 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

8 LOAN DETAILS Purpose of loan Salary / wages INCOME WEEKLY MONTHLY Amount of loan... I can afford repayments of...per week / month I agree to save...with each repayment (minimum 1 per week) Partner s income Pension Benefits (i.e tax credits, DLA, child/b) Please state below EMPLOYMENT DETAILS EXPENDITURE WEEKLY MONTHLY Occupation... Rent / Mortgage Employer s name... Council Tax Electricity Gas Employer s address... Employer s Tel No... Water Telephone Mobile Telephone Groceries Catalogues Credit Cards Date employment commenced.../.../... Hire Purchase Car Loan Is this position permanent / temporary? If temp when does the contract end?... Other Loans (inc credit union) Fares / Petrol How are you paid? Cash / Cheque / To bank account How often are you paid? Monthly / Weekly Car Insurance/MOT/Road Tax Pension Savings If you have been in your present post for less than 6 months please give previous Employer s details: Previous occupation... Employer s name... Home Insurance Clothing/Shoes/School uniform Entertainment/ Socialising TV License TV Rental Sky/Cable Employer s address... Childcare School / Work meals Prescriptions Pet Costs Date employment commenced.../.../... Cigarettes Magistrate court fines If self employed, confi rm date established.../.../... Maintenance Other Proof of income seen... Totals Disposable Income Copy taken? Y / N