One town in the South East is soon to have its own credit union thanks to the aid of a former councillor concerned with the amount of companies offering high interest rate short term loans to economically disadvantaged residents, experts say.
New non-profit credit union SurreySave, the brainchild of Heather Ward alongside two other volunteers, was launched to meet the dire need for low-cost banking services within the town, said the former Leatherhead North councillor. The influence of doorstop and payday advance lenders in Leatherhead has been growing, added Mrs Ward, pointing out that many of these loan products carry interest rates of 1,000 per cent APR or more.
Mrs Ward, who has been in Leatherhead for 25 years, said that she has seen unwelcome changes as of late. The debt in the area is ‘massive,’ the former councillor added, even in the face of the reputation the region has for affluence and riches.
The research undertaken ahead of founding SurreySave was frightening, according to Mrs Ward, who said that the ‘massive problem’ of short term loans was growing. While these lenders remain within the letter of the law, the rates of interest they charge for the privilege of unsecured loans can be crippling for low income earners, the class of people most likely to need cash in a hurry.
Payday lending may appear fine at first blush, but problems begin to emerge upn digging deeper. Paying off a loan as quickly as possible is relatively inexpensive, but missing a repayment deadline can see the borrower quickly buried under an avalanche of fees and charges that there is no digging out from, leading to massively ballooning debt.