Borrowers get alternativeto loan sharks

My Home Finance, which has been launched by the National Housing Federation, will offer people who are financially excluded access to credit at lower rates than they would normally be charged.

It will lend eligible borrowers, who have had a face-to-face interview, relatively modest sums of around 500, to help them to buy everyday items such as school uniforms, a washing machine or furniture.

People will repay the money on a weekly basis and will be charged interest of 29.9 per cent, far lower than the 200 per cent APR they would be charged by a doorstep lender or rates of 2,000 per cent typically charged by loan sharks.

Customers will also be given debt advice and help in opening a bank account.

The group, being run in partnership with the Department for Work and Pensions, Royal Bank of Scotland, 26 housing associations and the Wates Foundation, will be one of the largest not-for-profit financial services providers in England.