Hoot Credit Union
Hoot joins calls from the charity Citizens Advice that home credit lenders, also known as doorstep lenders, should be covered under the same rules that have helped to decrease the number of payday loan users recently.
Citizens Advice highlight the massive savings that borrowers could make if the same rules were applied to home credit companies. Hoot recently compared the interest charged on our loan book over the last financial year to that of the most well-known home credit provider in the UK and found that we saved members of our community over £500,000 in loan interest by coming to us rather than a doorstep lender.
This is without factoring in the opportunity credit unions provide to accounts holders to build savings alongside their loan repayments, to better shield them against unexpected expenses in the future.
Issues surrounding home credit is the most common form of high-cost credit problems that Citizens Advice staff deal with. Those lenders charge interest rates of up to 1557% APR compared to Hoot’s highest interest rate of 42.6% APR.
Gillian Guy, Chief Executive of Citizens Advice said "There’s no questioning the evidence – the FCA’s cap on payday lending has been a success. But it’s time now to address the problems consumers are facing in the home credit market."
We echo the Citizens Advice calls to the Financial Conduct Authority (FCA) to give consumers the same protections as payday loan customers by including home credit in its definition of high-cost short-term credit when it publishes its proposals for the high-cost credit market in the Spring.
The FCA currently defines high-cost short-term credit as any credit product with an APR over 100% which must be mostly repaid within 12 months.
Throughout Hoot’s 13 year history we have worked tirelessly to offer an alternative to doorstep lenders however, we are well aware that with more than 1.6 million people currently using home credit loans in the UK, there are many many more people we can help in our community.
The good news is that the FCA, who regulate in this area, have indicated that they have identified the problems that high-cost home credit loans collected on the doorstep can have for borrowers.
If you, or anyone you know, are currently struggling with loans with doorstep lenders – please contact one of our friendly members of staff who could talk you through the ethical alternative that Hoot offers to the community