The payday loan medicine has finally arrived in the form of People to People lending platform eMoneyUnion.com
Manchester, England (PRWEB UK) 25 July 2013 -- Lee Birkett CEO Comments;
“With an estimated 1 million+ people trapped in multiple payday loans, a solution to this financial tsunami could only be found by bringing together a group of fast moving internet gurus. We needed good people who wholeheartedly believe in the crowd funding principles and all that the collaborative economy promotes."
"One fundamental principle to the success of any crowd funding project; is the ability to deal with big social problems and quickly. A solution to those stuck in the payday spiral certainly qualified and the recruitment of IT talent and social lenders has been relatively straightforward."
"In less than a year; the team at eMoneyUnion.com have brought together a team of accountants, web developers and big number lending gurus to form a game-changing Peer to Peer loan platform to serve those excluded from the high street banks and building societies."
"The BIG added bonus is that we are also able to deliver unrivalled returns to the individual social lenders. Up to 12% p.a. fixed rate return, all loans backed by credit worthy Personal Guarantors, eProvision Fund for non-payment and no lender fees!"
"In very much a back to basics approach to lending, we are only willing to provide access to loans, if a borrower can get someone like Mum or Dad to support their application; remember the old days when you had to go into the bank with your Mum or Dad to open an account, never mind borrow some money!"
"Well with the internet and eMoneyUnion, you only now have to bob to our online platform, if your Mum or Dad or friend/family member say you are good for it, then chances are, so will our growing group of individual lenders"
Notes to editors:
Peer to Peer Lending is not currently regulated by the Financial Conduct Authority and lenders monies are not covered by the Financial Services Compensation Scheme. The Peer to Peer lending platforms operating under license in the UK today are regulated by the Office of Fair Trading for debt administration.
The eMoneyUnion platform acts as a matchmaking and underwriting service, presenting pre-approved individual borrowers to individual lenders, who can then decide to lend or not. Loans can be requested for amounts between £1,000 and £10,000 for any purpose including cars, consolidation and we will also encourage applications from those with low credit scores, the borrowers will however need to find a suitable Personal Guarantor with a very good credit history.
Individual lenders monies are ring fenced in a Lloyds TSB Bank PLC client account. Additional security is provided by the eProvision fund which has been created as a back stop to maintain regular interest repayments to personal lenders in the event of non-payment by the borrower and Personal Guarantor.
The total high cost credit market is currently estimated to be worth £8BN a year and a large percentage of the UK’s most financially vulnerable are trapped with these unaffordable and often short term lenders. If these borrowers had access to longer term loans and at a fairer rate, their financial and mental well-being would be dramatically improved.
eMoneyUnion are not involved in the high cost credit or payday loan market i.e. 100’s% + APR. One of our key objectives is to get people out of an expensive debt spiral and onto a fairer interest rate. This consolidation process, in the majority of instances, improves the credit rating for people and opens up even cheaper access to credit further down the line.
In recognition of the particular financial difficulties payday loan borrowers are facing, and in a positive move by the Government, the law has been changed to allow sufficiently resourced local credit unions to increase the interest rates charged, to reflect the risk of lending to financially challenged borrowers from 2% to 3% per month.
One of the main downfalls with credit unions is that coverage is patchy, for example the large town of Macclesfield where eMoneyUnion is based, has no credit union at all. The terms of credit union membership also vary dramatically, with many of these charities requiring people to be established savers before they can borrow any money. Being able to access credit from a charitable credit union to settle payday loans is very much a postcode lottery.
eMoneyUnion have no postcode restrictions to borrowers or lenders, we also do not require borrowers to be saving for a period of time before being able to apply for a loan.
The Borrowers
A consequence of the credit crunch has been the devastating explosion of payday loans. Millions of people who had nowhere else to turn after having their overdraft pulled or their credit card limits reduced have fallen into a financial payday trap.
To encourage individual lenders to provide a loan to someone with a less than perfect credit history, we needed to come up with additional incentives i.e. a higher rate of return for the lenders was a big driver, but the critical element was providing as much security of loan repayment as possible. After consultation with prospective individual lenders, we came up with the Bank of mum and Dad concept, insisting that borrowers obtain a Personal Guarantor to support them in their loan application.
We do not rely on credit checks alone and we will consider proposing all applicants for a loan, providing they can prove to us that they can afford to repay the loan back.
The Lenders
There are an estimated 50,000 active social lenders in the UK, all wanting a better return on their money and happy to be part of a sharing economy. The majority of lenders will spread their risk over various Peer to Peer platforms. The largest platforms by monies lent are No 1 Zopa, No 2 Funding Circle and No 3 Ratesetter.
The 3 largest platforms are members of a recently formed trade association, The Peer 2 Peer Finance Association. We are fully supportive of The Associations Rules and Operating Principles. Once eMoneyUnion has a notable scale of completed loans live on the platform, we will be applying to join. We have shared our business plans with the Independent Chairman of The Association Christine Farnish who has confirmed that “The whole Peer to Peer activity will be regulated end to end by next spring.”
eMoneyUnion lenders can choose the amounts, time periods and Borrowers Risk Ratings “AAA, AA or A” that they wish to lend to. The rating is a combination of the borrower and their Personal Guarantor.
For further information about this press release please call eMoneyUnion: Lee Birkett on 01625 750027 or email lee(at)eMoneyUnion(dot)com
Lee Birkett, [email protected], 01625750027, [email protected]
Share this article