With Christmas just around the corner, lending institutions are seeing a marked uptick in their members taking loans for the holiday season.
Head of the Cooperative Movement and Credit Unions, Kemar Cumberbatch, told Barbados TODAY that the island’s two largest credit unions were offering substantial unsecured Christmas loans.
Cumberbatch said Barbadians were showing interest in the $50 000 being offered by the Barbados Public Workers’ Co-Operative Credit Union, as well as the $25 000 on offer at City of Bridgetown Credit Union.
“The membership of both of those credit unions have been utilising those unsecured facilities, and some of the smaller affiliates, they’ve also been taking up some of their special loan promotions. Some have $10 000 unsecured, some have $5 000, but in terms of the dollar value, there’s been an uptick in terms of the amount of people that have been taking those facilities,” he said.
Cumberbatch added that credit unions have raised their unsecured loan ceilings in response to demand.
“At one credit union last year, there would have been about 80 or so people who would have taken the $20 000 Christmas loan that they had then. Now that they’ve increased it to $25 000, they have about 60 or so people who’ve taken it. So, because of the demand, they’ve increased the dollar value available to the membership,” he said.
Corinne Clarke, chief operating officer of Barbados Public Workers Credit Union, said she’s observed an increase in debt consolidation during this time. “What we’ve found is that there’s an increase in debt consolidation loans, so persons are taking the opportunity to bring their debt together and reduce their overall debt-to-income ratios.”
She added, “The new loans would obviously be if we’re consolidating external debt, and it would generally remain within what is standard for the debt consolidation loan with us, so we have like five to six years for the higher amounts. However, we always seek to work with our existing members who may want to consolidate their internal loans and ensure that they can manage their finances.”
Cumberbatch noted that members benefit from not having to begin repayment until the end of January, when salaries return to normal.
“So once you come in and you get the facility, you will start repaying come the next period. Some credit unions have started Christmas loans before December. Some of them started as early as late October and early November, so once you sign up and you begin the process and you actually get approved for the loan, you start paying the next month.”
“So those persons who started in October would have started paying in November. Those who got in November would have started paying in December, and those who got in December will start paying in January,” Cumberbatch explained.
He explained that members took the seasonal loans for a variety of reasons.
“Some people like to do some fixing up around the house, buy some gifts for the children, and, you know, make themselves feel special for this, this very special season,” Cumberbatch disclosed.
The head of the Cooperative Movement said credit unions remain mindful that some borrowers may experience difficulties.
As a result, he said repayment terms can be adjusted to suit members’ circumstances.
“Generally, the credit unions have a very people-centred membership-centric touch, so we always encourage our members to reach out to us if they believe that they’ll have an issue.”
“If they lose a job, somebody has died, or some significant event has happened that would affect your ability to repay, we always encourage you to give us a call so that we can figure out how we can assist you, maybe restructure the particular loan so that you don’t find yourselves with a delinquent facility,” Cumberbatch said.
“You may get the $25 000, and you may want to repay in three years, you may want to repay it in four years. So the credit union would generally work with you and try to stretch the repayment out for a longer period of time if that is something that would benefit you. So, where the loan promotion may be for three or four years, the credit union will still work with the individual if they want a shorter period or if they want a longer period.”
However, some smaller institutions reported that they were not seeing an increase in members borrowing for the holidays.
President of the Barbados Co-operative Business Association Ltd, Oriel Doyle, said borrowing activity has so far remained steady, though he expects that to change shortly.
“The normal amount, nothing out of the ordinary so far, there’s usually an increase just about a week before Christmas,” Doyle said.
(LG)
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