MSE News: Government-backed lender launched to help low earners

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"My Home Finance will offer those financially excluded access to credit at far lower rates than loan sharks ..."


Read the full story:
Government-backed lender launched to help low earners

Jeff_Bridges_hair

Thats all well and good but again they are targeting people who more then likely cant afford the repayments - notice how they have opened in a place of high unemployment?

And if these people needed something like a washing machine and such like they can get that through the social anyway..

First impressions are not impressed.

TUS

Jeff_Bridges_hair wrote: »

And if these people needed something like a washing machine and such like they can get that through the social anyway..

Or for £40 via Gumtree/eBay. Or possibly for free via Freecycle.

Someone in such financial hardship shouldn't be spending £hundreds on such a thing IMO.

Peelerfart

Not for profit organisation charging 29.9% !

How on earth are they going to avoid making a profit?

Paul_Herring

Peelerfart wrote: »

Not for profit organisation charging 29.9% !

How on earth are they going to avoid making a profit?

The directors and managers will be on 6 figure salaries, requiring this organisation to make petitions to the government for taxpayers' money to avoid making a loss.

WestonDave

I also have misgivings about a government scheme which appears to encourage the less well off into debt. I appreciate that if it cuts the loan sharks out of the equation then its a positive step, but maybe they could set the loans up in such a way that having paid off the loan they then make further payments to build up a savings balance for future needs, or that loans are only available alongside budget coaching which again encourages them to put away a small amount each week/month and helps them understand finances, shows them how to seek good deals on utilities etc. Simply switching profits from loan shark to state doesn't really solve the problem.

ElkyElky

What a load of bull. Encouraging people in to debt is a great way to prevent another recession. It doesn't matter if it's Government backed, charging those rates most certainly isn't going to help low earners.

They can get a loan from the social interest free which is taken directly from their benefits so they have no choice but to repay.

This is just another ludicrous scheme to make some people very rich. Not-for-profit my !ss.

If they don't have a washing machine, then stick to hand washing. As for school uniforms.. shirt and trousers from Asda for a tenner, sorted.

Percy1983

To be honest thats a low APR for the risk involved, thats how it works higher risk higher APR as there is a higher chance of defaults.

I don't see it as encourging debt as such, these people would get into debt anyway with companies charging much more.

millym

All sounds like a bad idea to me

Of course, when you try to get a budgeting/crisis loan or community care grant, they will probably send you to these people instead. Nice to see the government looking out for the poorest in society...

I feel sick.

What's wrong with credit unions? They charge lower interest, and you have to save with them first, to prove you can manage your finances.

The last thing folks on low income need is more debt. They need to live within their means. Will it stop loan sharks? Surely the government could legislate against the massive APR's charged by these companies?

Paul_Herring

millym wrote: »

What's wrong with credit unions? They charge lower interest, and you have to save with them first, to prove you can manage your finances.

You've answered your own question.

JimmyTheWig

If you borrow £500 over three years at 10% it costs £80 in interest. At 29.9% over a month, it will cost £12

And how, exactly, is a low income family going to repay £500 in a month?