'Loan sharks' alternative offered
A new lender has been launched to give people on low incomes an alternative to using loan sharks and doorstep cash providers.
My Home Finance, which has been launched by the National Housing Federation, will offer people who are financially excluded access to credit at lower rates than they would normally be charged.
It will lend eligible borrowers, who have had a face-to-face interview, relatively modest sums of around £500, to help them buy everyday items such as school uniforms, a washing machine or furniture.
People will repay the money on a weekly basis and will be charged interest of 29.9%, far lower than the 200% APR they would be charged by a doorstep lender or rates of 2,000% typically charged by loan sharks.
Customers will also be given debt advice and help opening a bank account, to encourage them to save.
The group, which is being run in partnership with the Department for Work and Pensions, Royal Bank of Scotland, 26 housing associations and the Wates Foundation, will be one of the largest ever not-for-profit financial services providers in England.
It plans to open 10 branches across the West Midlands, which has one of the highest levels of unemployment in the UK, by the end of October.
The branches, which will be run by East Lancashire Moneyline, will be located on high streets and in shopping centres.
If the pilot is successful, My Home Finance will open branches across England, with plans to advance 150,000 loans to people on low incomes during the next 10 years.
Branches have already opened in Hereford, Worcester, Walsall and Northfield, in south Birmingham, with further ones planned for Coventry, Tamworth, Dudley, Wolverhampton, Birmingham city centre and Erdington, in north Birmingham, by the end of next month.