Why Community Finance?
Community finance organisations offer a fairer, more human approach to saving and borrowing.
Member-Owned and Community-Focused
Credit unions are owned by their members, not shareholders. This means any surplus is reinvested back into the organisation or distributed among members, rather than extracted as profit. CDFIs and social lenders operate on similar principles, prioritising community benefit over maximising returns.
This fundamental difference shapes everything about how these organisations operate, from the interest rates they charge to the way they assess applications and support members.
Lower Interest Rates
Credit unions in the UK are legally capped at charging a maximum of 3% per month (42.6% APR) on loans. In practice, many charge far less. This is a stark contrast to high-cost lenders, where APRs can reach several hundred or even thousand percent.
CDFIs and community finance organisations also offer significantly lower rates than payday lenders and other high-cost credit providers, making borrowing more affordable and sustainable for people on lower incomes.
Personal Assessment, Not Just Credit Scores
Community finance organisations take a more human approach to lending. Rather than relying solely on automated credit scoring, they assess applications individually, considering your current circumstances, income, and ability to repay.
This means people who might be turned down by mainstream banks or pushed towards high-cost lenders can still access affordable credit. It also means responsible lending that considers your actual financial situation, not just your credit history.
Financial Education and Support
Many credit unions and CDFIs offer free financial education, debt advice, and budgeting support alongside their savings and loan products. The goal is to help members build long-term financial resilience, not just provide short-term lending.
This holistic approach to financial wellbeing sets community finance apart from purely transactional lending models.
A Genuine Alternative to High-Cost Credit
For people facing unexpected expenses or struggling to access mainstream credit, community finance organisations provide a viable alternative to payday loans, doorstep lenders, and other high-cost options.
Whether you need a small loan to cover an emergency, want to build up savings for the future, or are looking for fairer financial services, credit unions, CDFIs, and social lenders offer ethical alternatives that put your interests first.
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