If you’re a Social Enterprise, why are you charging 4% interest?

September 25 2020

All lenders need to recover costs to administer loans, and our interest rate ensures we are able to continue to operate. As a Community Interest Company, we do not have shareholders to pay dividends or profit to. If we do make a profit, this must be re-invested into the organisation to benefit the communities we serve.

Some credit card providers offer a 0% introductory interest rate for those with an excellent credit score. Whilst the credit card provider will not make any profit on a 0% deal, they hope you will remain a loyal customer and take interest-bearing products from them in the future.

The majority of lenders advertise a representative rate. This means that just over half of the people who apply for a loan will receive the representative rate. 

For example, Tesco Loans quotes a rate of 2.9% representative based on a loan of £7,500 over 3 years. If you wish to borrow over a longer-term, the rate increases (7 years? The representative rate increases to 3.8%). Want to borrow less? On £1,000, their representative rate is 8.5%.  Remember, this is just the representative rate that is quoted, and you will not know what rate you are borrowing at until you apply for the loan.  The maximum rate they are currently charging is 25.% APR.[i]  Aged over 74?  Sorry, they cannot help you.

What makes us different?  If you apply for a loan with us, you will receive a fixed interest rate of 4%, no matter how much you are borrowing or for how long.  We do not have an upper age limit and are much more flexible as to the types of income we can take into account. For example, we are happy to accept pensions, State benefits and self-employed income into account in our assessment.

We regularly check our lending rate against other providers and think that we are very competitive based on their representative rates. Our loans have no early repayment charges and the flexibility to make lump sum reductions of £100 or more at any time.

For more information about our range of home improvement loans, click here

For a no-obligation chat with one of our friendly advisers, contact us here.


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