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

vaporate

Peelerfart wrote: »

Anyone remember the days when if you couldn't afford something you did without until you had saved the money ?

Food?

Do without...night

rhcp

5% administration fee as well as the interest!

iolanthe07

vaporate wrote: »

Food?

Do without...night

If you need to borrow money to buy food, then you really are up !!!!!! creek and need professional help to budget properly - not another loan.

Peelerfart

vaporate wrote: »

Food?

Do without...night

But this isn't for food, there are other benefits, if needed, to pay for that.

marshallka

Paul_Herring wrote: »

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.

One of the directors is a former MP (lib dems) so it seems.

EmehEm2005

Why can't the ConDems support Credit Unions, a well-established (started in the 19th century) worldwide (America, Canada. Ireland etc) way of saving and borrowing financial co-operatives owned and controlled by their MEMBERS?

In Ireland, 50% of the population belong to a credit union, in America and Australia, the figure is around 30%. Credit unions are also growing fast in Eastern Europe, parts of South America, Africa and the Far East.

Some credit unions loans will cost you no more than 1% a month on the reducing balance of the loan (an APR of 12.7%). What this means for example is that if you borrowed £1000 over 1 year, you would repay no more than £1067 in total. Many credit unions charge less, some may charge more but by law this cannot be more than 2% a month on the reducing balance (an APR of 26.8%).

Credit union loans come with no hidden charges and no penalties for repaying the loan early. Life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, insurance would repay the loan for you.

When you borrow from a credit union, you may carry on saving, meaning that by the time you finish repaying the loan your savings have grown as well.

Most credit unions can lend for up to 5 years (unsecured) and up to 10 years (secured). Some credit unions can lend for up to 10 years (unsecured) and up to 25 years (secured).

More information on the ABCUL website (just type in ABCUL in your search engine).

Mike

Former chair of a community credit union, on committee which helped set up a city-wide credit union, now member of that credit union.

Paul_Herring

EmehEm2005 wrote: »

Why can't the ConDems support Credit Unions,

How would you like the current government to support credit unions, without resorting to using tax-payers' money?

Gorgeous_George

The problem is that many borrowers will see this as easy credit and the scheme will provide another £500 of debt to be consolidated using loan sharks.

GG

Jojo1daffy

It's to stop the huge uprising of these ripoff payday loan companies that charge 2000-3000% apr on a short term loan. I can see the benefit of that: I considered getting one to cover a mortgage payment of £300 to prevent having my mortgage lender on my back, but after seeing what I would pay back I decided that coming to an arrangement with my mortgage lender would be far cheaper.

I can see the benefit definitely of having access to short term credit for unforeseen expenses and school uniform time for low income families.
Time was you could borrow amounts like £500 from your high street bank and pay it back over a year - that facility does not exist anymore and it's a shame.
When I was a teenager I would borrow a few hundred quid to pay for an impromptu holiday when there was a good deal, I also bought my first hifi on a short term loan from my bank. To be able to do that in recent times for more pressing expenses such as school uniform, washing machine etc would have been a godsend to me. I think it's a good idea. And to be honest, I think you need to be a person who the facility is aimed at to understand why that is.

ALIBOBSY

EmehEm2005 wrote: »

Why can't the ConDems support Credit Unions, a well-established (started in the 19th century) worldwide (America, Canada. Ireland etc) way of saving and borrowing financial co-operatives owned and controlled by their MEMBERS?

In Ireland, 50% of the population belong to a credit union, in America and Australia, the figure is around 30%. Credit unions are also growing fast in Eastern Europe, parts of South America, Africa and the Far East.

Some credit unions loans will cost you no more than 1% a month on the reducing balance of the loan (an APR of 12.7%). What this means for example is that if you borrowed £1000 over 1 year, you would repay no more than £1067 in total. Many credit unions charge less, some may charge more but by law this cannot be more than 2% a month on the reducing balance (an APR of 26.8%).

Credit union loans come with no hidden charges and no penalties for repaying the loan early. Life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, insurance would repay the loan for you.

When you borrow from a credit union, you may carry on saving, meaning that by the time you finish repaying the loan your savings have grown as well.

Most credit unions can lend for up to 5 years (unsecured) and up to 10 years (secured). Some credit unions can lend for up to 10 years (unsecured) and up to 25 years (secured).

More information on the ABCUL website (just type in ABCUL in your search engine).

Mike

Former chair of a community credit union, on committee which helped set up a city-wide credit union, now member of that credit union.

This is all well and good, but what happens when you don't have a local credit union. I have looked but there isn't one in the area. The next nearest are over 10 miles away. One is only for people in or ex emergency services and the other has a limit to the local area.

Ali x