The Church has vowed to help people obtain affordable credit by offering payday loans which don't come with an interest rate of over £4,000% APR. Credit unions have, for a long time, been an affordable way to borrow money over a short period of time. The Church plans to utilise the credit unions around the country, of which there are around 500, to deliver cost effective lending services.
Would You Use The Church?
The church has already established a credit union for its staff and believes their services could mean an end to high charges for people in need of short term loans. The Archbishop of Canterbury is using the power of the church to try and solve a modern day problem. In turn, it will help show the church as being an approachable organisation for problems, such as money worries.
The Church is not intending to lend money or debt collect should somebody fail to pay, but instead use the existing credit union network to deliver the service.
The Archbishop said to the head of Wonga "we're not in the business of trying to legislate you out of existence, we're trying to compete you out of existence."
What's The Difference in Payday Loan vs Credit Union
There are various routes to get affordable credit. If a debt problem has arisen and the financial problem is too severe it's important to get debt advice, however, before borrowing money from a payday lender, could there be a cheaper option?
On a loan of £400 which is borrowed for 30 days, the repayment will vary from company to company. We're compared credit unions too and the difference was remarkable.
Borrowing from a payday lender for 30 days would mean a total repayment of £525. If you borrowed the same amount of money from a credit union the amount would be £416. That's a difference in fees of £109.
There are credit unions on most high streets or accessible in local communities.