| Discovery Credit Union has seen scores of loan applications over recent weeks from people looking to raise money for Christmas presents and to fund their festive season.
The credit crunch has made it difficult for many people on low incomes to get credit through normal sources such as finance companies and credit cards.
Although the doorstep lenders are still doing business in Dundee, more and more people are beginning to realise there is no point in accepting the enormous interest rates often accompanying this type of short-term finance when credit unions are a much cheaper alternative.
One doorstep lending company reveals on its online finance calculator that a £250 loan over 23 weeks carries interest of a stunning 545.2%.
DCU development worker Bob Kelly said his credit union was interested in “people and not profit” and charged an annual APR rate of 26.8%, on a par with some credit cards.
DCU has been campaigning in the run-up to Christmas to get people to think about the overall cost of finance, not just whether or not they can afford the weekly payments quoted by doorstep lending companies. The message, Bob said, is beginning to get through.
He said, “We act sensibly and try not to encourage people into debt, but where they do need a loan, people are definitely better off if they come along and borrow the money from us.
“We have been campaigning for the last couple of months and it has worked well. We’ve had a big uptake, and that’s good news for the city.
“I have about 70 applications sitting in front of me that we want to process before Christmas, so it looks like we’ll be working right over the weekend. Word is definitely getting out.”
Bob said that while the number of regular savers and customers the credit union has is about the same as last year, there has been a flood of new customers looking for a short-term loan.
The maximum DCU offers is £250, which is designed to stop people taking on too much credit so repayments do not become a problem.
Cash for loans comes from savings credit union customers make with DCU, and steps are taken to ensure that people’s money is protected.
“We will never solve everyone’s problems through the credit union, but our ethos is to encourage people to make regular savings and to get into that habit,” said Bob.
“If you have to borrow, then borrow at sensible interest rates and don’t get locked into high interest where you will never see an end to it.” |
