We used to hide from the loan sharks – but this lender is different

8:35am Friday 16th May 2008

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WHEN doorstep lenders came calling at Paul and Joanne Knight's home they used to hide, pretending they were out.

Sometimes the knocking would stop but eventually the lenders would get their money - whether in cash or goods.

For the married couple from Ronkswood, Worcester, struggling on a limited income and providing for a three-year-old son the near-endless cycle of borrowing from "loan sharks" was becoming the only way to buy essentials such as food.

Paul, who is registered disabled, said: "Once you start borrowing from loan sharks it's like a rollercoaster.

"Before you have even paid off your first loan you're taking another loan from another company to pay off that first loan."

With the family sinking deeper into debt, Paul was diagnosed with degenerative disc disease of the spine in February 2007.

He said: "Everything went wrong. We had borrowed some money and the interest was 183 per cent."

There was no point going to the high street banks because Paul and his wife had no security.

Paul said: "If you're working, you've got collateral or property then the banks will talk to you but if you are at the bottom of the scale you've nowhere to go.

At the end of their tether, the couple got in touch with their housing association, which put them in contact with Worcestershire credit union Black Pear Savings and Loans.

They sat down with Chris Reed, general manager, at Black Pear's offices in Lowesmoor, Worcester. He went through their finances and was able to agree a plan to get them out of trouble.

Mr Reed, who is one of several advisers at Black Pear, explained how the not-for-profit credit union works: "It is a financial co-operative offering savings and loans where people are encouraged to save with us if they borrow. It's about ethical, responsible lending."

The credit union offers loans without any hidden charges from £50 to £5,000 at the fixed APR of 12.7 per cent with borrowing members also encouraged to save a little with each repayment. If the union cannot help or the financial problems are more complex, Black Pear can refer people to organisations which can offer support, including Citizens Advice Bureau.

Mr Reed made it clear the union was not a free lunch for people looking for easy money but will try and work through borrowers' money troubles with them.

He said: "People come in and I will sit down and talk to them and look at the overall situation and help them manage their saving and lending. It is amazing the difference it can make to people's lives."

Joanne, aged 22, and Paul, 36, joined the credit union's 2,000 members in March 2007 and made the final payment on their doorstep loans seven months later.

Paul, of Windrush Close, said: "As it happened, we made our final payment and our fridge broke so we needed a £200 loan to replace it, but we didn't have to go to the doorstep lenders."

The lenders still come knocking on their door offering loans at sky-high rates but now the Knights are not buying.

"It has been a eye-opener for us and we have no plans to go back to doorstep loans," said Joanne, who is full-time carer for her husband.

Paul Lopeman owns Barnards Green Butchers in Malvern and started saving with a credit union 15 years ago.

A customer told him about the union over the meat counter so he decided to become a member.

The 48-year-old said without a union loan he would not have been able to move to his new flat in the town in 2002.

Mr Lopeman, of Priory Road, believes putting a few pounds aside each week, particularly in his younger days, has given him peace of mind. He said: "It is good to save a bit before you borrow."

With business strong, these days Mr Lopeman has little need for a loan but he continues to save for a rainy day.

The company, staffed mainly by volunteers, is regulated by the Financial Services Authority, with all loans covered by insurance and an annual dividend for members.

Savings are lent to other members wanting to borrow so there is a community element to the union.

Oliver Carpenter, a Black Pear company director, said: "In the end it is a community being able to lend to its members.

"Some people get involved solely to save and be able to use their savings helping their community."

For more information on Black Pear call 01905 612197, e-mail admin@blackpear.org.uk or log on to www.blackpear.org.uk