Thu, 15 May 2008

Britons seeking a short loan or payday loan should look beyond money shops for better terms, according to the Association of British Credit Unions (ABCUL).

As a result of the credit crunch, which has seen loan providers tighten their lending criteria, more and more consumers are believed to be turning to money shops.

However, although these may seem convenient, they frequently offer worse deals than those available elsewhere, Lucia Webster, head of membership services at ABCUL, said.

She added: "Credit unions offer a great alternative to money shops and payday loans for people needing small loans over relatively short periods.

"Credit unions 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."

A study conducted by Moneyfacts.co.uk found that since the beginning of the year, more than half of lenders offering personal loans have upwardly adjusted their rates.

Source:londonstockexchange.com