Loan service launched to help consumers avoid loans sharks

A new loans service has been launched in the UK to help consumers get the finance that they need to manage financially without having to turn to loan sharks, according to recent reports. There have been many concerns expressed about consumers that cannot get traditional credit, as many turn to unscrupulous and unregulated loans sharks out of desperation.

The new loans service in the West Midlands has been launched by the National Housing Federation, and it is hoped that it will help consumers that cannot get traditional finance to avoid going through a loan shark. Consumers will be able to borrow up to £500 as part of the service, and this will be subject to a 45 minute interview to ensure that the borrower will be able to repay the loan.

Repayments on the amount borrowed will be paid weekly, and in addition to being able to get a modest loan consumers will also be able to benefit from debt advice. The scheme is being called My Home Finance, and it will offer a range of services including helping consumers to open bank accounts and offering advice on their debt and financial problems.

One concern that some have about the new service is that the interest charged is higher than the maximum level that credit unions are allowed to charge, which is 26.8 percent APR. The new scheme charges interest of 29.9 percent APR during the pilot, and this will then increase to 49.9 percent APR.

An official from the National Housing Federation said: “By offering fair loans at fair prices, we hope to offer an alternative to both loan sharks, who cynically prey on hard up families, and doorstep lenders, who are all too willing to lend cash to the desperate at hugely inflated rates of interest.”

Tags: debt, Title loan, personal finance, traditional credit, finance, National Housing Federation