DEBT-RIDDEN people in Essex have a new alternative to payday lenders and loan sharks after a credit union launched a new branch in a high street bank.
Ethical credit union Essex Savers opened in Barclays in Chelmsford High Street on Friday (July 25) and also showcased a new short-term loan, which it hopes will stop people from falling into debt with payday loan firms and illegal lenders.
Alison Davies, managing director of Essex Savers, said: "Many people we have helped have been in such a dire financial situation that it has forced them to take out more than one payday loan.
"Some of these loans are now thousands of pounds each because of the interest these companies charge.
"A £400 loan can easily turn into a £2,000 nightmare. We have helped people to pay off these loans but it would have been better for them to come to us in the first place because it would have caused far less damage."
Essex Savers is a not-for-profit bank in which members pool their savings to provide low-interest loans to help financially disadvantaged people avoid the crippling interest rates of payday loan firms and, worse still, illegal loan sharks.
It offers loans, from £50 to £7,500, at competitive interest rates from 12.68 per cent to 26.8 per cent APR, which counter the extortionate rates of up to 6,000 per cent APR that some loan sharks have been known to charge.
People desperate for cash are not able to borrow from high street banks or building societies without providing them with some form of financial guarantee, so the launch of Essex Savers in Barclays provides those strapped for cash with a lifeline to pay for a washing machine repair or a new car.
Darron Diggins, the local Barclays manager, said: "Joining with Essex Savers is a means for us to support the community with their finances when we as a bank are not able to do so.
"It's all about helping people: we don't want people to go to other lenders which can do far more harm than good."
Essex Savers will be on hand at Barclays every Thursday, but is also available at 28 different locations across the county on a day-by-day basis, while bosses are also planning to be at every library, as well as community centres and church halls.
This July, Essex Savers announced that lending has reached £3.75 million with a total of 4,420 loans.
But the credit union faces a struggle in order to continue to provide its growing membership with support.
Currently, the company covers its operating expenses with the interest it gets from loans but the credit union predicts that its costs will rise to £205,000 next year if they employ a central team of staff to support the union's rapid growth.
For this reason, Alison Davies is calling for more people and businesses to save with the credit union.
"If we double in size, then we will be able to cover our costs," she said.
"We are not a charity and so we are primarily looking for people to save with us.
"Most people come to us as a last resort and this makes our expenditure too high.
"Most credit unions do not lend as much as we do and so we really need more people to save with us to allow us to keep doing this."
