UK consumers seeking a short loan or payday loan have been advised to search beyond money shops for better terms and conditions.
The Association of British Credit Unions (ABCUL), which made the claim, said an increasing number of borrowers are being forced to turn to money shops as a result of a tightening in lending criteria by loan providers, driven by the effects of the credit crunch.
But according to Lucia Webster, head of membership services at ABCUL, no matter how convenient they may seem, money shops frequently offer worse deals than those available elsewhere.
"Credit unions offer a great alternative to money shops and payday loans for people needing small loans over relatively short periods," she added.
"They charge no more than two per cent on the reducing balance of a loan and many charge just one per cent, which would mean that £1,000 taken out for a month and paid back weekly would accrue just £5.76 in interest at one per cent."
According to a study by Moneyfacts.co.uk, more than half of UK lenders offering personal loans have increased their rates since the start of the year.
Money Shops Not Suitable For Personal Loans, Borrowers Warned
Money Shops Not Suitable For Personal Loans, Borrowers Warned
Fri, 16 May 2008
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