Aberdeen Residents Urged To Reject High-Interest Loans

Fri, 31 Oct 2008

An Aberdeen councillor is urging cash-strapped local residents to reject offers of high interest loans in the build-up to Christmas .

Instead, SNP councillor Mark McDonald has advised people seeking financial aid for the upcoming festive period to contact the Grampian Credit Union .

Mr McDonald has tabled a motion to the next full council meeting that will call for the UK Government to investigate the practices of companies offering interest-heavy loans, with a view to protecting "vulnerable individuals" with bad credit .

"The practices of these companies is highly questionable from a moral standpoint, and I would hope that the UK Government would seek to ensure that the sort of irresponsible lending which has led us to the brink of financial meltdown would be curtailed," commented Mr McDonald.

"Credit unions are a much better method of securing finance than to try and find a high-interest loan through companies who leaflet door-to-door."

He added: "I hope that my motion will attract cross-party support at the full council meeting, and that this issue receives the level of attention from government that I feel it deserves."

Grampian Credit Union has backed Mr McDonald’s plea and issued its own warning to people in financial difficulty, following reports that local residents have been paying up to £50 to firms offering to find them loans .

The organisation’s chief executive, Gill Mathieson, said: "What some people have actually been paying for is a letter with our contact details on it."

"As credit unions do not rely on borrowing from other banks or the international money markets and are not in the business of buying up the debts of other financial institutions, they are well sheltered from the economic turmoil which is causing worry for so many people at the moment."

Mathieson explained that credit unions are "very self-contained institutions" as they use their members’ savings to make loans to other members.
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