MORE people are avoiding payday lenders and using a not-for-profit lending organisation.
That is the claim from the East Sussex Credit Union after its lending increased by 13% in 2013/14 with both loan numbers and size growing.
The union insists the increased level of borrowing is good news as more people are shunning payday loan companies in favour of what they say are their “fairer” and lower-interest loans.
The union supplied £1.2 million worth of loans to cash-strapped residents with cheaper interest rates than typical high street lenders. For example a £1,000 credit union loan borrowed over 12 months at 26.8% APR would have a total repayment figure of £1,134.72.
The same loan with sub-prime credit card Vanquis, charged at 39.9% APR, would total £1,193.87 while payday lender Pounds to Pocket, at 399% APR, would total £2,151.12.
Nikki Plummer, of the East Sussex Credit Union, said: “We’re seeing an awful lot of working people coming to us now who have payday loans that keep rolling over.
“Our policy is that we never lend to anyone that it doesn’t make sense to. We have an ethical lending policy which says that if people who come to us are going to be pushed financially or put under more stress, we’ll not lend to them.
“We don’t give loans without having a mandatory savings element either. Everyone that borrows from us has to save with us at the same time.”
Ms Plummer said the union did not make a profit from loans under £800 and its surplus, or profit, was made on larger loans.
The union revealed it made a profit of £24,200 in 2013/14, up from £6,700 in 2012/13, and members’ savings grew by 27%.
Richard Priestman, president of the East Sussex Credit Union, said: "These are really exciting times for East Sussex Credit Union.
"Over the coming year we are now very well placed to build on the progress we have been making. It is especially pleasing that awareness of the credit union is growing and that more and more local people are responding to our products and services.
“Just as importantly, the ongoing development of our business puts us in an even stronger position to continue to support the less fortunate in our community."