MSE News: 'Affordable' payday loan credit union praised by Camilla, Duchess of Cornwa

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Former_MSE_HelenFormer_MSE_Helen Former MSE
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"The Duchess said it was "very important to raise awareness" about credit unions, while visiting LMCU today..."
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'Affordable' payday loan credit union praised by Camilla, Duchess of Cornwall

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  • Raising awareness of the CU is a great thing but whilst I hope they do well, I hope they manage to filter the genuine from the dross applicants.
    those taking out a payday loan with LMCU can also choose to pay off their loan over one, two or three months, and there are no additional charges for late or early repayments.

    Sadly too many will see this as free money, borrow now and safe in the knowledge there are no late fees, simply not bother with it come repayment day.
  • john1002john1002 Forumite
    981 Posts
    Part of the Furniture 500 Posts
    Wish we could use a credit union, the only one we did have closed down over 2 years ago due to a large number of people not paying.

    john
  • KxMxKxMx Forumite
    9.7K Posts
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Forumite
    Perhaps she should be talking about paying people a living wage instead of plugging credit unions, however respectable the company.
  • RafterRafter Forumite
    3.8K Posts
    Nice sentiment but really not sure a credit union can afford to do this and not run into difficulty.

    A loan of £200 over 2 months at 29% APR is less than £10 in income for the union.

    For that the credit union has got to cover it staff costs, paperwork, regulation, systems credit losses, bank charges and collection costs - oh and pay interest to its depositors.

    Sorry - can't be done. Payday/short term lending is binary - you either have to charge silly interest to cover your costs and losses or not do it at all and do properly underwritten lending over longer periods.

    Personally I would rather the latter - with a proper social safety net. I think the majority of payday lending is not in the interests of society or customers who are either living beyond their means or just need to budget better.

    R.
    Smile :), it makes people wonder what you have been up to.
  • KxMx wrote: »
    Perhaps she should be talking about paying people a living wage instead of plugging credit unions, however respectable the company.

    Its called living within your means, and bettering yourself if you want to earn more!

    Plenty of opportunity in this country even during this harder period, but sadly too many people want everything on a plate with no effort.
  • antrobusantrobus Forumite
    17.4K Posts
    Rafter wrote: »
    Nice sentiment but really not sure a credit union can afford to do this and not run into difficulty.

    A loan of £200 over 2 months at 29% APR is less than £10 in income for the union.

    For that the credit union has got to cover it staff costs, paperwork, regulation, systems credit losses, bank charges and collection costs - oh and pay interest to its depositors.....

    The example given by LMCU on their website quotes £8 interest on a £400 loan for 1 month. Mind you, there's a £11 charge if you want the money today; otherwise you have to wait 3 days for the money to come through BACS. So there doesn't seem to be a lot of margin in it.
    Rafter wrote: »
    ....Sorry - can't be done. Payday/short term lending is binary - you either have to charge silly interest to cover your costs and losses or not do it at all and do properly underwritten lending over longer periods.

    I would suspect that whilst LMCU are doing payday lending, they're not doing a lot of it.
    john1002 wrote: »
    Wish we could use a credit union, the only one we did have closed down over 2 years ago due to a large number of people not paying...

    Yes, that's the problem with CUs. Their margins aren't big enough to accomodate risk, and if they get it wrong, they go bust. On average, 2 or 3 go bust every year.
  • cockmadcockmad Forumite
    45 Posts
    The main problem for Credit Unions is that they don't normally credit search, thus attracting a significant number of 'free riders' who take advantage. IMO, they should be a little more exclusive and tighten their lending criteria regarding new members who haven't yet proven themselves.
  • 27col27col Forumite
    6.6K Posts
    Who the hell cares about the opinion of some spoilt Royal, who wouldn't know financial hardship if it got up and bit her.
    I can afford anything that I want.
    Just so long as I don't want much.
  • Unless you made your loan application in a single paragraph which totally confused the lender then they would appear to be incredibly incompetent.
  • Unless you made your loan application in a single paragraph which totally confused the lender then they would appear to be incredibly incompetent.
    :spam: button clicked.
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