A pioneering partnership of not-for-profit lenders are working together to offer JustBorrow loans that aims to transform short-term borrowing in the capital – and make unaffordable payday loans a thing of the past.
The financial regulator, the FCA reported that last year Londoners took out 796,202 of these High Cost Short-Term loans with an eye-watering average 1,250% APR thus costing £147 million in interest and fees – the equivalent of paying £184 to borrow the average loan of just £284.
The new JustBorrow loans provide a fair and affordable alternative at a fraction of the cost – so the same loan spread over 3 months at 42.6% APR costs less than £29 with the credit unions.
New research released last week by Step Change Debt Charity estimates that this Christmas, a third of UK households will borrow an average £200 to cover the cost of the festive period.
“Christmas is an expensive time of year and with budgets tighter than ever, for many, taking out a loan is the only way to spread the costs,” explains Ravi Ravindran, Chief Executive of Lewisham Plus, one of the seven London-based credit unions. “But unfortunately increasing numbers are turning to expensive online lenders that may seem an easy option but end up costing hundreds of pounds in interest and leaving households with a festive financial hangover.”