Short term loan provider, Mr Lender, has begun a trial offering special discounted interest rates on loans taken out by all NHS staff. The trial will last until the end of February 2017. At 0.4% per day, it is half the current rate cap which was introduced by the FCA back in January 2015.
A 50% reduction in interest rates means a loan of £300 will cost £72 in interest charges over a three-month period. Compared to the same loan from the likes of Wonga who use the standard rate of 0.8%, a £300 loan will cost around £157.33 in interest. Missed payments could also potentially incur late fees of up to £15. The table below shows how the discount offered by Mr Lender compares to loans offered by other short term loan providers.
CEO and Founder of Mr Lender, Adam Freeman, said “We are always looking at ways to improve our service and offer the most competitive rates. We don’t want to use this special rate to encourage NHS workers to borrow money unnecessarily. However, we want to make sure they are aware that if they need a short term loan they can use a trusted firm which offers the most competitive rate in the UK.”
Salaries at the NHS have increased by 1% since 2010 and have failed to keep up with a rise in living costs, recent media reports have highlighted that many NHS staff are turning to short term loan companies for credit.
According to Unison’s annual salary survey of 21,000 NHS workers, 14% of staff are worse off than they were in 2010. The survey revealed one in 10 had pawned possessions, almost one in seven said they had re-mortgaged their home or even moved to a cheaper property as they could no longer afford to live there. Nearly one in five had taken on an extra job – and four out of five said they had considered resigning.
Further statistics show that 49% said that they had to ask friends and family for money in the last year alone because of financial hardship, and just over one in eight (13%) have sought the help of a debt advice service.
While nurses are still paid fairly highly compared to some other professions,
a 37.5 hour week can bring in anything from £22,000 to over £40,000 – the work is incredibly demanding and can put a lot of strain on the body, mentally and physically, according to Nursing Times.
CEO of the Consumer Finance Association, Russell Hamblin-Boone, said “The short-term credit market is a thriving sector and examples like this show that healthy competition exists. We know from our customers that responsible lenders are operating to high standards, providing cheaper more affordable loans.”