A London-based start-up is looking to address the payday problem, which is currently seeing over 3 million people apply for high cost credit.
Fund Ourselves, a new start-up that specialises in low cost loans and peer to peer lending is looking to tackle the ‘wonga problem’ which has seen millions of people in the last decade take out high cost loans and get caught in a spiral of debt.
In particular, Lancashire and the North-East has the highest number of applicants in the UK – and with interest rates typically over 1,000% APR, high cost loans may provide an injection of cash, but often cause more revolving debt problems for customers.
Nadeem Siam, the founder of Fund Ourselves explains: “The premise behind Fund Ourselves is to be as low-cost and flexible for borrowers as possible, with no penalising structure.”
“Borrowers cannot get a loan without passing fraud, credit, and affordability checks – but Ii they think they are going to struggle to pay the loan in time, they can notify Fund Ourselves using their online account and switch the loan to a longer-term plan – making the payment more manageable, without leaving a black mark against the borrower’s credit rating.”
Fund Ourselves currently offers loans of £50 to £500, at 540.03% representative APR, which may seem high but is still considerably lower than existing lenders in the space – and also reflects the inflated interest rate of a 3-month product that has been compounded to be shown as an annual product.
Customers are able to borrow over 3 months with no early repayment fees if they wish to clear their accounts before this.
The introduction of a new lender comes at an important time, which has seen large lenders including Wonga, QuickQuid, The Money Shop and Uncle Buck fall into administration in the last year.
With coronavirus creating further uncertainty for lenders (and borrowers), there is a huge gap in the market to offer affordable finance for people looking to borrow small amounts.
Other start-ups looking to gain momentum and market share in the high-cost space include Wagestream, a facility that allows you to take out money earned directly from your employer and Neyber, a loan scheme that allows you to borrow through your work and receive financial education and advice.