For example, it may be very tempting when you are short of money to
accept a cash loan from an illegal money lender (you may not even
realise the service they offer is illegal), but you will see from
the chart below that you might be paying an interest rate of
1000% without realising it. This means that if you
borrowed £300, the amount you have to repay would increase to
£3,000 in just one year.
Before accepting any loan, always ask for a clear
explanation in writing of the interest rate and how much in total
you will have to pay back. Never take out a loan unless you are
sure you will be able to pay it back.
It is a good idea to work out your household budget before
taking out a loan.
Credit unions
Credit unions offer an easy way to save and financial services
such as low-cost loans.
The main credit union in Doncaster is the South
Yorkshire Credit Union. South Yorkshire Credit Union have
branches throughout South Yorkshire and can be contacted on
03030 300010. Visit our South Yorkshire Credit Union page for
more information.
Use this chart to get an idea of how much interest you might
have to pay on different types of loans.
| Lender |
Amount of Loan |
Typical APR |
Term of
Loan(weeks)
|
Weekly Repayment |
Total Repayable |
Total Interest |
| Illegal Lender |
£300.00 |
1000% |
52 |
£55.50 |
£3000.32 |
£2700.32 |
| High Cost Credit Provider |
£300.00 |
246.5% |
52 |
£10.21 |
£530.41 |
£230.41 |
| Provident Personal Credit |
£300.00 |
272.2% |
52 |
£10.50 |
£546.00
|
£246.00 |
| South Yorkshire Credit Union |
£300.00 |
25.4% |
52 |
£6.49 |
£336.16 |
£36.16 |
To find out how different rates compare for other amounts,
use this calculator on the Money Advice
Service website.
You can also see how the cost of borrowing money from home
credit companies compares with South Yorkshire Credit
Union on the lenderscompared.org
website.