The chief of a credit union backed by a local authority has attacked the payday advance industry, remarking that British households in need of some extra cash should not go shopping for instant short term loans but instead sign up.
Last March, Haringey Council moved forward with their plans to launch the Haringey, Islington and City Credit Union after a lengthy six-year planning process. Martin Groombridge, manager of the credit union, has said that the new lender has provided cash loans to in excess of 4,000 customers.
Owned by its members, the not-for-profit cooperative offers individuals residing, working, or studying in Haringey loans by taking the £5 entry fee it charges its savers, pooling that together, and providing the funds to those in need, said Mr Groombridge. The bank manager said that no longer will people need to resort to ‘expensive’ instant short term loans thanks to the credit union, what with inflation being high and people facing wage freezes.
The move is designed to strike back against the payday advance industry that has grown by leaps and bounds within the borough. Payday lenders have faced criticisms for offering their loan products for high APR interest rates, though industry experts are quick to point out that annualising the interest on short term loans will easily provide massive interest percentages which misrepresent the actual cost of repayment on such a loan.
Traditional lenders have been lashing out at the payday lending industry for quite some time. Industry experts have suggested that the short term loans, which have proven very popular due to the lack of any credit check requirement, have only grown in popularity because of the difficulty in securing credit from a traditional source, which makes the irony of high street lenders taking issue with payday lenders palpable.