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Lincoln people to benefit from new solution to high-cost credit

Posted on 17th March, 2017 by Lincoln Against Poverty

Lincoln is set to become the second UK city to benefit from a new, ethical financial organisation offering a viable alternative to high-cost credit and door step loan companies, helping people escape the lure of unscrupulous lenders. Lincoln Money has been developed as a not-for-profit business by the team that runs the successful Sheffield Money.

Lincoln Money will provide affordable credit to people who cannot access mainstream banking or who have a poor credit history, with lower cost loans (see examples below). The service is available online at www.lincolnmoney.co.uk and by calling 01522 306 360. Loans from £100 up to £25,000 will be available, subject to the applicant’s status.

The problem Lincoln Money is addressing

Like many towns and cities across the UK, Lincoln has a large number of people who cannot access mainstream banking and loans and who turn to very high cost lenders such as Wonga.   They also buy goods on high cost hire purchase from stores such as Brighthouse and Perfect Home, as well as accessing regular loans from doorstep lenders such as Provident.

One person known to City of Lincoln Council has up to 15 creditors, including seven doorstep loans and four catalogue accounts.

People in Lincoln seeking financial assistance from Step Change have average debts of around £10,000 and some are left with less than £20 per month after paying bills and interest repayments.

City of Lincoln Welfare Advice Service reports that 50% of clients have one or more doorstep or payday loan and 25% have a high cost hire purchase product.

On average, people in Lincoln who have payday loans, from lenders such as Wonga, have an average debt of over £300 being repaid at interest rates in excess of 1,200% and doorstep loans, with lenders such as Provident, with average debts of £630.   People buying from high cost hire purchase stores such as Brighthouse have average debts of £720.

Lincoln Money is a broker service matching people to the most suitable services, according to their status and ability to repay, from responsible and ethical financial organisations which specialise in loans, savings and bank accounts, all under the Lincoln Money brand.

Lincoln Money will deliver far cheaper loans than high cost lenders such as Wonga and Cash Converter and is designed to be a mechanism to help people turn away from high cost loans and to move back towards mainstream banking and credit.

Employer payroll deduction scheme gives employed people access to lower cost loans

Lincoln Money is also encouraging employers to get involved, creating payroll deduction schemes for employees’ loan repayments and for savings. Employed people will be able to obtain even lower interest loans, with repayments taken directly out of their wages. This is a direct way for employers to help staff obtain better loans, to budget and manage their finances, avoiding high cost loans and assisting with their financial wellbeing.

Lincoln Money is part-funded by Key Fund which provides loans and grants to community enterprises, helping them to start-up, become sustainable or grow.

Lincoln Money will also provide loans for people to buy household goods, to help them stop using stores such as Brighthouse and Perfect Home which charge up to double the cost of goods via high interest rate loans over long periods.

Councillor Rosanne Kirk, Portfolio Holder for Social Inclusion and Community Cohesion, said: “Payday and doorstep lenders exploit the people in Lincoln who are most in need of credit, preying on their need for fast loans and charging extortionate interest rates. We are fighting them head-on, in line with the council’s strategic priorities and anti-poverty action plan, so local people no longer fall into the trap of loans with massively high repayments.

“People need a real alternative to help them stop using these notorious lenders. That is why we are supporting this new, ethical and affordable credit option.”

Rob Shearing, Lincoln Money’s Chief Executive, is head of the team behind the successful Sheffield Money, launched in 2015. He said: “Lincoln Money is lending to people that others will not lend to, whether employed or unemployed and on benefits. While interest rates are higher than banks’, due to the risk involved in lending to people with poor credit histories, they are far lower than Wonga, Cash Converters and the like and Lincoln Money is a lifeline away from them.

“We’re here for everyone in Lincoln. If we can find a better option for someone than lending money, then we won’t lend. When we do lend, we won’t make the loan bigger or the term longer than it needs to be.

“It’s a way to help people out of the trap of long-term, high cost loans and towards mainstream banking.”

Lincoln Money works with a range of providers, including a Community Development Finance Institution and bank account providers.

Sheffield Money, on which Lincoln Money is based, has so far benefitted over 4,000 people.   Like Sheffield Money, Lincoln Money is designed to help people stop using lenders such as Wonga and Provident and access responsible finance with far lower repayments*.

People can apply for Lincoln Money products online or by phone via www.lincolnmoney.co.uk call 01522 306 360.