15 September 2021
Is there still a place for high cost lenders?
Both organisations are regulated by the FCA and offer small loans, no larger than £1,000. Both refer to themselves as responsible lenders, only providing loans based on affordability to those who can make the repayments. Both would also argue they are providing a critical service to the many people in the UK who don’t meet the minimum lending requirements in order to apply for a loan or credit card and so are underserved by mainstream institutions.
High cost lenders are a real concern so I’ve been doing some research. A piece of insight from PwC identified that around a quarter of the UK population find it difficult to access credit from mainstream providers which is an unbelievable statistic. You can read more here. PwC also produced a report on the high cost credit market; one of the key takeaways for me was the fact that it is mostly women who take out high cost doorstep or payday loans and many report experiencing real stress and anxiety in trying to make the repayments.
So why do people continue to use doorstep and payday loan providers? Some would say that their circumstances leave them no option, but it does come at a cost. Morses Club provides an example on its website showing that a £300 loan would be paid back at £15 per week over 35 weeks at 498.34% APR representative meaning a total repayment of £525. Why would you pay that interest rate when you could come to us at Manchester Credit Union and pay the same figure back at the same repayment of £15 per week at 42.6% with a total repayment of £324.04? You will have saved yourself £200!
If you find yourself in this position, it’s really important to consider all the options available to you. We would urge anyone who is in need of a loan to contact their local credit union first as the figures above speak for themselves.
If you live or work in the Greater Manchester area please get in touch with us for more details of our savings and loan products at firstname.lastname@example.org. If you live outside the Greater Manchester area please look for your local credit union at www.findyourcreditunion.co.uk.Dawn Cowderoy, Business Development and Marketing Manager at Manchester Credit Union