Simon Read: Yes, no-interest loans do exist

 

Simon Read
Friday 01 August 2014 19:26 BST
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Are interest-free loans the answer to how we help struggling people? It's not a rhetorical question: there actually is a scheme in the UK that does just that.

How can this be possible? Who on earth would lend money without expecting a fat profit in return? To find out ,we need to look to Tenbury Wells, a small market town in Worcestershire.

There, through a no-interest loans scheme, known in short as NILS, hard-up people can apply for up to £400 and just repay what they borrow.

That means there's no chance of the debt rising to unaffordable levels – as happens, for example, with payday lending.

What's the catch? Borrowers must be facing financial difficulties and the cash must be used to buy essentials such as washing machines, school uniforms or medical equipment.

In fact, a "credit" that can be used to buy goods through local suppliers is handed over. Repayments are made over either a one or two-year period and on a weekly or monthly basis.

The scheme began in Tenbury Wells last year with an anonymous contribution of £5,000. It now receives other funding and has spread to nearby Ludlow.

It's based on an Australian scheme and was introduced by a worker at Tenbury Citizens Advice. It's an admirable move that should be adopted elsewhere by local councils.

s.read@independent.co.uk

Twitter: @simonnread

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