London Mutual credit union has said that more than 6,000 people have successfully applied for its new payday-style loans online.
The credit union offers loans of between £100 and £1,000 at an interest rate of 2% a month. This means that borrowing £400 for a month would cost just £8 in interest.
Customers who want the money the same day will need to pay an extra £11.
Borrowers do not have to save with the credit union but they must live or work in one of the four inner-London boroughs.
Other credit unions are expected to offer a similar service next year; competing with the controversial payday-loan market.
London Mutual also carries out affordability checks to ensure customers can pay the loan back.
The payday loan industry has come under fire in recent times as many providers often don’t check the affordability of a loan before approving it. The high interest rates can also be a problem for many borrowers.
Beverley Budsworth of The Debt Advisor said: “Traditionally you had to save with a credit union before you could borrow money from them. It’s great to see a credit union being more commercial and competing with the payday loan market. It’s also refreshing to see proper credit and affordability checks in place. Hopefully more credit unions will follow and make affordable short term loans available to those who need them.”
If you’re struggling with payday loans or other kinds of debts, you should be aware that there options are available to you including the new Protocol Compliant Debt Management Plan which was rolled out on 1 October 2013. The Debt Advisoris one of only 5 companies that have been so far been approved to undertaken these plans.
Call today on 0800 0851 825 to speak with one of our advisors. If you’re calling from a mobile, you can reach us on 0161 868 2500. Alternatively you can fill in the contact form at the top of the page and we’ll call you.