18 October 2011
A new report launched by the Centre for Responsible Credit this week sets out clear recommendations for the government to support CDFIs
By modelling the impact of different levels of credit cost on the living standards of low income households, the report supports the case for an expansion of ‘affordable credit’. The reports’ key recommendation reads:
“HM Treasury and the Department for Work and Pensions should set out clear milestones and targets to expand lending by Credit Unions and CDFIs to at least £2bn per year”
Points of interest:
- To increase lending by affordable providers to £2bn per year is currently 4.5 times created than the current lending taken by this market. This does not take into account the need for CDFI type lending to directly replace existing loans from high cost lenders
- Approximately £7.3m working age people live in households that are able to afford only up to about 80% of the minimum living standard even without considering the extra burden of credit repayments
- The Money Advice Service should develop a suite of materials designed to provide lower income borrowers with information concerning CDFI provision in their areas
Download the full report and summary
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Which?, the consumer advice body, runs discussion on high cost credit providers
Complementing the above study, Martyn Saville from Which?, the highly influential consumer advice body, has recently been working on a series of articles and blogs on the topic of high cost credit and legal loan sharking.
The articles focus on the high cost of borrowing and tactics used by high cost lenders. Whilst most high cost lenders charge APR of between 200% and 4000% APR, CDFIs charge rates between 25 and 50%. For an affordable alternative visit our Finding Finance website to find your local CDFI.
Articles of interest:
Q&A: Is it time to ban high-interest payday loans?
http://conversation.which.co.uk/money/high-interest-payday-loans-should-they-be-banned/
Payday loans and bank overdrafts compared
http://www.which.co.uk/news/2011/09/payday-loans-and-bank-overdrafts-compared-266802/#.Toa86pv5bFU.twitter
Payday loans market rife with poor practice
http://www.which.co.uk/news/2011/09/payday-loans-market-rife-with-poor-practice-266382/