The Capital’s biggest credit union is to make its loans more widely available in a bid to offer hard-up residents a genuine alternative to rip-off payday loans.
People will be able to walk in, join up and get a £500 loan paid into their bank account within two to three days, or a cheque the same day.
Capital Credit Union – which has around 18,000 members – said it was relaunching its Swift500 loan in response to customer demand and to challenge the payday lenders.
Anyone wanting to borrow cash under the scheme will have to join the credit union and agree to save a certain amount every month by direct debit, but will also be able to get quick access to money.
The loan can be paid back over nine months, not the one month demanded by payday loan firms, and the interest rate is 26.8 per cent rather than the 5000-plus per cent charged by lenders such as Wonga.
Lothian Labour MSP Kezia Dugdale said: “This is a really credible alternative to payday loans. I’ve been campaigning against payday loans for 18 months now, but there’s no point in just saying to people, ‘Don’t take one of these loans’ unless you have something else to offer instead.
“I’m really pleased the Capital Credit Union has announced this scheme. It’s about having an affordable, accessible alternative.”
The relaunch was staged yesterday – International Credit Union Day – outside a payday loan shop in Newington,
Chief executive Marlene Shiels said: “We know sometimes people need access to funds very quickly to purchase something unexpectedly or just to tide them over to payday.
“We also know that there are many people desperately trying to break the cycle of using high-interest payday or doorstep lenders.”
Credit unions are financial co-operatives which are owned, controlled and run for the benefit of members. The Capital Credit Union began in 1989 as a scheme for Lothian Regional Council staff and used to be restricted to public service employees. Since 2003 it has been open to anyone living or working in the Lothians and Borders. It is the third biggest credit union in Scotland.