Salford and the consortium of Greater Manchester Credit Unions are getting together to plan their very own payday loan scheme, in a bid to “combat” the use of loan sharks.
Salford Credit Union have claimed that a large percentage of their membership are, or have been using payday loans from both payday lender companies and illegal loan-sharks, hoping to limit this in the future.
Plans for the scheme show a maximum cap of 42.6% APR, receiving “astronomical” support from the wider of Greater Manchester Credit Unions, hoping to be launched mid-next year, says Deputy CEO Mark Brazendale.
Alec McFadden, Development Manager of Salford Unemployed and Community Resource Centre and Secretary of Salford Credit Union, said: “We can now probably facilitate a loan within less than an hour, where at one time it took us nearly three weeks.
“The point was made to me by the Archbishop of Canterbury that; ‘until the credit unions can compete with Wonga and people like that we’ll always have problems with Loan Sharks’ and they often charge above 900% interest.’”
The Salford Credit Union have been attempting to increase their ability to compete with both “Loan Sharks” and the wide assortment of payday loan apps.
Developments in the last few months include being able to give pre-paid debit cards for members to use and adding text functions for members to keep them aware.
Mr McFadden said: “Credit unions are, in my view, one of the best facilities in order to prevent an increase in poverty and combating ‘loan sharks’.”
Another project that will be releasing next year will be the new Family Loan service, designed to help families with school uniforms and other necessities toward the end of January.
“Mr Brazendale, said; “We listen to our membership and listen to what they actually want from us. What we found is our old scheme might not really be in their best interest when people were generally using it for cash-on-the-hip.
We wanted to gear it more for times where people actually need that money, so we will be giving them a bigger pot of funds and aim it at realistic purposes.”