AN UNEMPLOYED man who needed to borrow money to buy a pair of shoes says he has been saved from a payday loan trap thanks to a new community borrowing scheme.
Paul Wilson, 39, of Dormanstown, Redcar, needed to borrow £100 for shoes and to pay his energy bills.
He was about to contact a payday loan company who typically charge more than 4,000 per cent interest on very short-term loans, but instead was told about a new fair loans scheme run by Coast & Country Housing Association who charge at 69.5 per cent.
Coast and Country Housing has launched the loans initiative with social enterprise My Home Finance, as part of a wider campaign against high-interest lending.
The My Home Finance scheme is for people who would not normally be considered for a loan from a conventional source such as a bank or credit union.
Mr Wilson, who volunteers for community project in an attempt to improve his chances of paid work, has started taking in lodgers so he can still receive housing benefit, countering the effects of the so-called bedroom tax.
He said: “My Home Finance provided me a financial lifeline. If it had not been available I am sure I would have had to resort to a payday loan.
“The Coast & Country loan deal saved me from ending up on the payday loan treadmill having to take out one payday loan after another to meet the exorbitant interest rates.”
Iain Sim, Chief Executive of Coast & Country, said: “It is gratifying to see that the My Home Finance scheme is having a positive effect and is giving tenants, such as Paul, a more reasonable alternative to the payday lenders and doorstep ‘loan sharks.’”
My Home Finance has been set up by the National Housing Federation, to address a ‘credit gap’ for people that need small loans, whose credit history may prevent them from getting a loan from a bank or credit union.
Loan officer, Janice Dawson is based within the Rents and Benefits team at Coast & Country’s headquarters at Ennis Square, Dormanstown, Redcar.