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One cooperative bank says that more than 6,000 clients have now successfully requested their payday-style loans on-line. Mutual London gives individuals the opportunity to lend between 100 and 1,000 pounds at an interest of 2% per annum. Borrower do not have to cut corners with the cooperative to bid, but they have to reside or work in one of four inner city districts.
A similar scheme is anticipated to be introduced by other UK cooperative banks next year. Loans are available on the CUOK website of the London Mutual credit union. Loan cooperatives are currently restricted to charge no more than 2% interest per months, so borrowing 400 pounds over a period of one months would charge only 8 pounds interest.
Borrower must reside or work in four London districts - Westminster, Camden, Southwark or Lambeth. Mr Lakshman Chandrasekera, CEO of the London Mutual Credit Union, said the test had assisted them in making credit decisions: "We' re trying to figure out if you're the kind of guy who borrows and doesn't bother not to pay.
"Exactly the same as any other payday lending franchise. Folks can request the debt, get the judgment location and point, and point get the medium of exchange within a few work time. "However, the costs of taking out loans are significantly lower than with payday borrowers.
A lot would demand more than 100 to lend 400 pounds for a whole months. Chandrasekera said that his cooperative also carries out thorough controls to make sure that clients do not fight with the repayment of the loan: "We' re doing thorough controls on affordableness, so we will make sure that that individual can afford to make the payment.
" Emma took out a £100 loan with CUOK last month to buy her kids back uniform which she has agreed to repay over a three-month bout and cost them just £4. 04 in interest: "London Mutual acknowledged that only every fifth applicant like Emma can be accepted on the sole grounds of the on-line recruitment procedure.
Michaels regular used payday lending houses until he found he could lend 400 from CUOK: "Payday lending houses are so agressive. You' re also charging about 10x as much as a cooperative bank. "Mark Lyonette, CEO of the Association of British Credit Unions, says it's important that its members accelerate their lending, but they shouldn't be too short-term:
"It has just implemented an automatic rating system based on a scorecard that works with information bureaus. While we may not be interested in granting loans for a 10 day term, we do not need to take 10 day time to grant a mortgage. "A number of industrial observers believe that there are severe limitations to the degree that cooperative banks could ever rival payday creditors.
Independent Zeitung financial journalist Julian Knight says payday borrowing has become too big: "You just don't have the size. Payday loan industries are £3bn to a total of pound fourbn well.