THERE are many reasons why people might take out a personal loan (often known as an unsecured loan if your property or car would not be at risk if you did not pay it back). Some people use them as a way of paying for a big project, such as a new kitchen, while for other people taking out a large loan may be a way to deal with looming debt.
Not all lenders are responsible, particularly when it comes to dealing with those who have a poor credit record, however, some lenders place caps on interest charges and have good records on the environment and helping the local community as well. Here are some good choices.
Credit unions are usually small, not-for-profit lenders with a tie to a particular area or type of employment. Those who use a credit union must have a ‘common bond’, which means that not all of these organisations are open to everyone.
You can find ones that may be relevant to you by searching on this website, which is run by ABCUL, the Association of British Credit Unions Limited.
The rates offered by credit unions for small loans are far better than those for payday lenders, and many will consider those with poor credit histories. They also offer special loans for difficult circumstances, for example for those who are struggling to pay for household goods and would otherwise use expensive catalogue finance.
The Salvation Army Bank, Reliance, offers bank loans with rates as low as 6.9 per cent APR. The bank only lends to those with what it calls a “clear credit history”. The bank’s own ethical policy is strong, mirroring the stance of The Salvation Army, a Christian group with a strong interest in social justice. Reliance refuses to enter into a banking relationship with anyone who does not uphold the Universal Declaration of Human Rights, and exceeds the London Living Wage for staff. The bank indirectly supports communities around the world through the Gift Aid payments made to The Salvation Army that, since 2002, have been equivalent to a minimum of 75 per cent of operating profit. Examples of the support provided by The Salvation Army in the United Kingdom and Worldwide include hospitals, schools and social housing schemes.
Nationwide Building Society
Britain’s biggest mutual Nationwide offers personal loans with rates as low as 3.4 per cent APR for current account customers. The group scores highly on Ethical Consumer’s Move Your Money scorecard thanks to a robust ethical policy.
Metro Bank also scores highly on the Move Your Money scorecard, thanks to a lack of the legacy ethical issues associated with the biggest banks. Its personal loan product is a one-size-fits-all product at 5.9 per cent fixed for the loan duration, and the bank, which famously prints its bank cards in store so customers can have them immediately, also says that you could have your loan the same day. Applicants must have a MetroBank current account.
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