Credit Unions Warn Of Lockdown Loan Shark Fears

Credit Unions of Wales is concerned that people suffering financial difficulties during the Covid-19 lockdown are at risk from high interest doorstep lenders.

Following an Illegal Money Lending Unit announcement that loan sharks are preying on vulnerable people, the credit union wants individuals to realise that they can offer affordable loans from £50 to £15,000 at competitive rates.

As ethical savings and loan providers, credit unions offer a far safer method of short-term borrowing that won’t leave people facing years of staggering debt.

As not-for-profit, community banks that focus on responsible lending they speak to members face-to-face and work out what’s affordable for them.

This is particularly important at a time when the Money and Pensions Services finds that 27% of adults in Wales have less than £100 in savings and investments.

Claire Savage, Policy Officer for Credit Unions of Wales said: “Unfortunately some greedy and unscrupulous individuals are capitalising on the Covid-19 pandemic to take advantage of those struggling financially and we need to spread the word that credit unions are the ethical alternative lenders.

“Our focus has always been on ensuring people across Wales have access to flexible, affordable and fair lending and want them to realise our door is always open to them.”

This comes at a time when millions of workers have been furloughed, while others are finding that their income has reduced as a result of loss of overtime.

Self-employed workers are particularly hard hit, as they wait for the Government support scheme, or make a claim for Universal Credit.

As social enterprises with no external shareholders, credit unions are able to offer loans at very competitive rates of interest

Interest is charged on the reducing balance of the loan, there’s no hidden charges or penalties for paying the loan early and you receive free life insurance.

If your employer is a payroll partner with a credit union then you can save regularly or pay off a workplace loan directly from your wage packet as a perk of your employment.

Claire Savage added: “Following the Covid-19 lockdown period we hope even more people will realise the benefits of having a secure savings account with their nearest credit union being available at a time of crisis.

“With 11.1million people in the UK – which includes 24% of adults in Wales – rarely or never saving according to the Money & Pension Service, the need is greater than ever to improve personal financial wellbeing by saving regularly.”

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