The initiative — the first of its kind in the UK — offers families the chance to buy appliances, coupled with an affordable loan from their local credit union. A loan over 52 weeks from a home-credit provider can cost 12 times more than a loan provided by a credit union with APRs exceeding 270 per cent compared to a typical 12.7 per cent at a credit union.
It is estimated that between five and eight million UK residents cannot access mainstream credit. Some borrowers rely instead on home-collected credit companies, weekly payment retailers or loan sharks.
However the link-up with The Co-operative Electrical, a division of the Co-operative Group, enables credit unions the opportunity to offer members access to the wide-ranging products and services of one of the UK’s largest and most successful online electrical retailers.
David Sanderson, Commercial Manager of The Co-operative Electrical, said: “The impact of the recent recession has resulted in more and more people experiencing the restrictions of financial exclusion, paying the price for limited choice with interest rates and charges many times higher than those of mainstream personal loans.
“For those without access to credit or the available funds to take advantage of online discounts, the prospect of buying electrical products can be daunting — often there is no option but to turn to high interest loans or loan sharks.”
Added Mr Sanderson: “There is a need for an ethical and affordable alternative for purchasing those everyday goods that most take for granted. And, through our close relationship with credit unions, we have developed a scheme that delivers greater choice and cost saving benefits to the financially excluded.
“The scheme offers great choice, prices and service, while addressing the issues and dangers of entering into agreements with high interest weekly payment or loan companies.”
The new scheme, initially piloted with Knowsley Mutual Credit Union near Liverpool, is now available through almost 100 credit unions with plans to extend availability to all credit unions in Britain.
Terry Egan, from Knowsley Mutual, told the News: “As the recession and economic cuts begin to hurt, more and more people will be pushed in to debt and poverty. We want to work in partnership with all those businesses and groups that seek to provide a more ethical and just alternative.”
Once the credit union member has made his or her selection and has had their loan approved (or agreed to release savings) in order to make the purchase, the credit union places the order and the item is delivered direct to their member’s home in 48 hours.
The scheme can assist all credit union members and also delivers benefits for the credit union including increased new membership and customer retention.
• Credit unions interested in receiving further information about the scheme can by emailing David Sanderson.