New initiative to counter “loan sharks”

In an effort to counter the influence of short term loans companies and so called “loan sharks”, a former councillor in Leatherhead has helped to set up a credit union.

A councillor in Leatherhead for 20 years, Heather Ward says that she has seen plenty of evidence of debt and the problems that loans with excessive interest rates can have on people in what is normally seen as an affluent area.

The new credit union is called “SurreySave” and will be owned by its own members, like other credit unions.

Those who favour credit unions think they have a lot of advantages over normal banks and such loans providers as short term loans companies.

Credit unions are normally small scale and any profits are ploughed back into the union.

Loans can be arranged for members but, unlike some short term loans companies, they are not given out to anybody who is unable to pay them back, eliminating some of the debt problems that people get into when they take out short term loans.

Mrs Ward says that there has been a strong need for a credit union or something similar in the Leatherhead area for a long time as the number of cases of “loan sharks” intimidating borrowers in the area has been increasing and the influence of legal short term loans companies has been on the rise as well.

She has been campaigning to get a credit union started up in leatherhead for the last eight years.

SurreySave, like other credit unions, will be regulated by the Financial Services Authority or its successor, so that money held by its members will be as well protected as any other traditional savings account.

A spokesman from Credit Choices spelt out some of the comparisons between taking out a loan from a short term loans company and a credit union.

He said that the obvious advantage of an instant cash loan was that the lack of a credit check was very attractive to anybody who had had credit problems in the past and as long as the loan could be paid back on time was absolutely fine. The problem arose when the loan could not be paid back and would have to be taken out again and again, because the total amount needed to be paid back increased quite rapidly.

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