Street UK short-term lender expands to London and Manchester
Street UK, which says it is the first ethical provider of online short-term loans the UK, is expanding operations to borrowers in London and Manchester.
The lender is non-profit-making and claims to be the cheapest such provider of short-term loans in the UK.
It is designed to help those who are financially excluded or who cannot borrow from banks.
Until now, Street UK has only been accessible to borrowers in the West Midlands, where it has five branches.
Someone using its website to borrow £200 for the minimum three-month period would pay £39.65.
That compares with a fee of £100 for a Wonga flexi-loan.
|Cost of a £200 loan for 3 months|
"Short-term loans do not have to be expensive," said Martin Hockly, the chief executive of Street UK.
"They can be provided both online and on the High Street for reasonable interest rates that cover the costs and associated risk of lending."
The organisation is able to charge low rates because of the income it gets from providing back-office support to other financial companies.
It is also backed by four big charities that campaign to eradicate poverty.
Other lenders in the market have to charge fees that are high enough to cover rates of non-repayment.
However, Street UK says that 90% of its loans are repaid in full, and insists that it is financially sustainable.
Since January 2015, short-term lenders have been limited to the amount they can charge. Citizens Advice said that since then, the number of people having problems with payday loans has fallen by more than half.
The maximum daily rate allowed is 0.8% of the amount borrowed, while total fees cannot exceed 100% of the money loaned.
However, Street UK says it charges just 0.2% per day.
The Rev Philip Krinks, chair of the St Martin's Partnership, which is backing the lender, said the launch was a key milestone for the UK's financial inclusion sector.
"Street UK's online service will enable many more people to access its fairly-priced loans, and prevent them from going to commercial lenders, loan sharks and doorstep lenders," he said.
The cheapest way of borrowing money is usually to agree an overdraft with a bank.