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Sheffield Money or Wonga-lite?

douglasJust because it is cheaper than Wonga is not a good reason for the Council to promote payday loans. (“New pioneering Sheffield cash lender aims to break city debt cycle” – Star 10 August 2015)

It might seem like a good idea for ”Sheffield Money” to offer a slightly cheaper alternative but an APR of 89% does not help people on low incomes. It just gives official backing to high-interest, short-term loans instead of helping people take back control of their finances.

The Council would be better to invest in local advice services and credit unions to help people out of debt, instead of encouraging people to stay in debt with high-interest loans.

 The DWP’s Budgeting Loan scheme provided zero-interest loans for many people in need.  Sadly, this was abolished in April 2013 and the responsibility for “local welfare assistance” was passed to councils.  This too is now under threat.  Wonga-lite is no substitute

 Sheffield Green Party has consistently called for more funding for front-line advice services, which are now under huge pressure because of cuts in other public services.

 Douglas Johnson
Sheffield Green Party

Topics: City Wide, Douglas Johnson, Poverty

There is One Response to Sheffield Money or Wonga-lite?

22nd August 2015

Hi Douglas. APR is a pointless figure because it is based largely on the repayment terms (e.g a loan repaid weekly has a higher APR than one paid monthly) rather than how much interest is paid. Also, having spent years in debt advice, I know that it’s enforcement procedures rather than APR or cost of credit that ruin lives. Some loans which appear to be good value lead to a debtor losing their property, being declared bankrupt etc. On the other hand, some of the door to door lenders with the highest interest rates are very considerate – they’ve built the default risk into the cost of the loan. I’d like to see the details of the credit agreements before assuming they are a bad thing.

I don’t think that assuming credit is always a bad thing is a helpful attitude.