Now Credit Union CLEVR Money, the credit union of Preston, Blackpool, Fylde, Wyre and Lancaster, has warned of the financial disaster many could face if they resorted to high interest loans.
The warning comes as the Credit Union, a nonprofit with some 5,000 members, reported receiving a growing number of loan applications.
Anthony Brookes, Loans Manager, said: “The rising cost of living is certainly hitting people in our communities hard and we have certainly had an increase in loan applications as a result. Over the past few months, however, we’ve seen more and more people requesting smaller amounts to “help them out” to cover unforeseen expenses and even pay bills and overhead.
“The most worrying factor is the growth in the number of workers contacting us, those who were about to make do with their wages but are facing dramatically increased expenses without a pay rise. terrifying on their own.”
He continued: “We know that people are turning to other forms of lending such as payday loans, Buy Now Pay Later and even loan sharks which is a huge concern for us. These type of loans can very quickly go bad as debt skyrockets when penalties and fees are imposed or more money lent without the borrower having the means to repay it.
The Caisse populaire helps people avoid debt by encouraging savings and offering what it calls “responsible loans”. Anthony said: ‘We are concerned that rising bills will force more people to borrow from these lenders and so we are working hard to encourage them to contact us first, an ethical and responsible non-profit co-operative who really care about their well-being.”
Anthony noted that previously most loans were for “specific things… to cover the cost of major expenses such as home renovations, car repairs, holidays or Christmas for example”, but said the situation was changing.
A credit union can help people in debt reduce the cost of paying off their loans by arranging to consolidate existing debts into one consolidation loan.
Anthony said, “It pays off several high-interest but fast-growing debts and replaces them with a single credit union loan at an affordable interest rate.” It’s really brave when someone comes to us with a number of debts and asks for a debt consolidation loan, but it’s all worth it when they feel the relief of getting their finances straightened out, especially right now, in the face of inflation and rising costs.
You can apply for membership if you live or work in the postcode areas: PR1 – PR5, FY1 – FY8 and LA1 – LA2.
You can also become a member if your employer is a payroll partner.
See our companion article to find out how a local health worker was helped by such a loan and how to join CLEVR Money