An analysis of Darlington Credit Union’s records shows how the motivation for loans has changed and expanded during the last five years with weddings and dental repairs among why people are borrowing money from the not-for-profit organisation.
The following reasons, for which customers now are taking high value loans, did not feature in 2010:
- Medical expenses
A high proportion of these loans were for dental repairs, such as the mending or replacement of broken dentures or denture plates or damage to front teeth in an accident.
- Landlord bonds
These are generally required because a person is moving into private accommodation for the first time. In the current economic climate, many people initially are opting to rent a home due to rising house prices and the amount needed for a mortgage deposit.
- Living expense problems
People with little disposal income, which affects their ability to save for a rainy day, are turning to the Credit Union when their tight budgets are sent awry in the wake of receiving unforeseen or higher than expected household bills.
- Weddings and car repairs
The Credit Union believes these loans reflect how its appeal is expanding to a wider audience
In 2010 the Credit Union approved 311 loans with a total value of £180,000. Last year the number had risen to 1,208 with a value of more than £1million.
Tony Brockley, Darlington Credit Union Chief Executive, said: “What is noticeable from the analysis of our loan book is the massive change in volume between 2010 and 2015 and that the reasons for people approaching us to borrow money have diversified considerably.
“An unexpected household bill can hit those trying to manage on a tight budget for six, but a credit union can offer a low-cost solution to help them bridge the gap in their finances.
“This changing reasons for people taking out a loan with us also demonstrates how much progress we are making in growing our appeal to a much wider customer base.
“It positions us at the forefront of the Government’s plans for Credit Unions to become a more mainstream financial movement with the provision a bigger range of services.”
Later this year, the credit union will add current accounts, cash ISAs and online banking to its existing savings and loans products as part of a Government national £38 million investment in the Credit Union movement.
In 2010 the top five reasons for a loan from Darlington Credit Union was Christmas; home improvements; household equipment; holiday costs; and debt consolidation. In 2015 it was Christmas; household equipment; home improvements; holiday and debt consolidation
By value in 2010 they were Christmas; home improvements; household equipment; holiday costs and car purchase. In 2015 car purchase; home improvements; Christmas; debt consolidation and household equipment.