Squeezed for cash? How to find a FAIR lender and avoid the new loan sharks – The Crusader
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They are a sign of financial predators preparing for a feeding frenzy as a crisis looms this winter for millions facing a money squeeze, perhaps from unemployment after furloughing ends, losing their universal credit uplift, rising prices or extra Christmas pressures.
Martin fears others will get taken in because when you have no reserves to fall back on, it doesn’t take much to fall into arrears.
++ If you’ve been affected by this issue or feel you’ve been a victim of injustice, please contact consumer champion Maisha Frost on firstname.lastname@example.org
More than a quarter of UK adults are now considered financially vulnerable, that’s 3.5 million more since the pandemic started.
Affordable credit provider and charity-owned company Fair for You (FfY) enables people to buy home essentials like beds and cookers. While the demise of the likes of doorstep lender Provident and rent-to-buy retailer Brighthouse has been long overdue that has left a dangerous vacuum, warns FfY’s interim chief executive James Wilkinson.
“High cost and short-term credit has dropped by £1.6 billion since 2016.
“There are millions who can’t get mainstream credit and they’ve not stopped needing to borrow money for emergencies.
“We’ve never been busier, but we can’t fill a £1.6billion hole overnight. There are unregulated lenders preying on families with fewer options. Signposting people to fair alternatives is an urgent challenge.”
Fair4All Finance, the not-for-profit body helping vulnerable people, is now working on a UK-wide No Interest Loan Scheme pilot.
Chief executive Sacha Romanovich explains: “The loans will provide a vital financial cushion for people unable to access or afford existing forms of credit, but who can afford to repay small sums, by offering a way to spread essential or emergency costs.
My money’s in order and I talk to my children about understanding the numbers, knowing their rights and staying in control
Former payday lender victim Martin Kavanagh
“We also want mainstream banks and building societies to step up and serve this customer group well.”
Credit unions and responsible community private lenders, known as CDFIs, “have fantastic expertise. More must be done to increase customer awareness of them,” she adds.
“We urgently need to scale up the fairer alternatives that are already out there. We’ve already provided support to lenders delivering over 50 per cent of affordable credit provision in England.
“We’d like to see other innovative approaches like the No Interest Loan Scheme Pilot to help more families move from surviving to thriving.”
Marriage breakdown, job loss and benefit delays sent Martin, 37, into a debt spiral. Before that, he had routinely used buy-to-rent retailers and high-cost credit.
“My mum had always used them. We all hid behind the curtains when the collector called. It was just a habit. When you are a kid you don’t question if there is another way,” he says.
“When I got a job borrowing like that seemed the obvious thing and it was also so easy – and they make it so, you just get taken in.
“I just went from one payday lender or rent-to-buy to another, paying off the minimum. I knew I could do that because of my job.
“But then my circumstances changed, there were changes and then delays in sorting tax credits. I couldn’t meet payments and it all fell apart.”
As arrears mounted, a bed and a cooker were seized that he had bought from PerfectHome that has now closed all but one of its stores.
“The bed cost £300 and I’d paid back £1,000, and the same for the cooker. When the debt collectors came they broke the bed up in front of me. ‘Don’t mess with us’ was the message but it was such a waste,” he claims.
PerfectHome, the trading name of Temple Finance Ltd, said it was unable to comment about the actions of debt collectors.
The hard experience was a turning point for Martin. “It was strange but I felt relieved I knew things could not carry on like that anymore.”
He found Fair for You online, got a new job and joined a credit union.
“They helped me get my money straight. Before then I did not know my rights. Now I’m not on any benefits. My money’s in order, I have a proper credit record and I talk to my children about understanding the numbers, knowing their rights and staying in control.”
*Martin’s name has been changed
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