Get New Council Loans Instead of Payday Lenders Loans
According to the Guardian Newspaper, the city of Sheffield have launched a range of council loans for their residents in a fightback against high-interest deals from established Payday Loans Companies. They say that this scheme could save its poorest residents £20m in one year alone.
The new financial services brand, called Sheffield Money, is supported by the city council and regulated by the Financial Conduct Authority.
The new brand is called Sheffield Money and it promises loans from its website in as little as 15 minutes and has a city centre money “shop” so people can call in to obtain loans, with a phone application service for those unable to visit in person.
It is confident that around 25,000 residents, particularly tenants, people on benefits and the unemployed, will take out loans from Sheffield Money over the next year. It also believes the business model could be replicated around Britain, giving hope to millions struggling with paying extortionate interest rates on their debts.
Their interest rates are thought to be offered between 49.9% and 89.9% by Sheffield Money, so someone wanting £500 for one year currently has to repay Provident Financial £910, but only £610 to Sheffield Money.
Whilst APRs of nearly 90% will strike many as remarkably high, the reality is that borrowers with poor credit ratings are automatically excluded from “best-buy” rates. Instead, many turn to companies like Wonga which charges 1,509%.
As Sheffield City Council leader Julie Dore says “payday lenders and doorstep lenders have been ripping off and exploiting some of the most vulnerable people in our city, preying on their need for available credit and charging extortionate interest rates. Sheffield needs to be able to offer these people a fairer option which will stop them being forced to go to these notorious lenders”.
She adds that the scheme offers a double bonus because, instead of excessive debt repayments sucking money out of the area, it will, instead, stay within the city and be spent on goods and services.
It all seems like a good idea to be honest and let’s see if other councils and districts take up the mantel too.
If we hear anything about other Council areas doing the same thing, we will let you know.
In Wales? Then you might like Welsh Payday Loans.