Affordable Credit

At some point in your life you will probably need to borrow money. This may be for any number of reasons and can include personal loans, mortgages, credit cards or purchasing household items/clothes/electrical goods on credit (also known as ‘hire purchase’). Borrowing money is not necessarily a bad thing, but it can cause problems if you can’t afford to pay it back and are charged extra or have to pay a very high rate of interest on top of the amount you borrowed.

There are a number of affordable credit options available to people in Newcastle such as Moneywise Credit Union Ltd.  They may be able to help you if you’ve been refused credit by other lenders. If they can’t offer you credit they will be able to tell you what you need to do to put this right.

Expensive Credit

Pay day loans may seem like a quick fix solution, especially if you are turned down for a loan or credit, but they are a very expensive way to borrow money. Some pay day lenders charge an excessive interest rate.  Moneywise Credit Union Ltd offer affordable pay day loans up to a maximum of £300 and the longest repayment is 2 months.

Illegal money lenders or Loan Sharks operate outside of the law, taking advantage of people who need cash quickly. They often charge very high interest rates and sometimes use threats and violence to frighten people who can’t pay back their loan. They may resort to bullying and threatening tactics to try to recover the debt. Please do not be tempted to use a loan shark even if you think you can’t borrow money because you have a poor credit history, are struggling with your finances or your income is low.  Please see the article on Loan Sharks for more information. Report any Loan Sharks to Stop Loan Sharks.

Other expensive types of credit that you should avoid where possible:

  • Hire purchase
  • Instore credit or hire purchase
  • Online and high street payday lenders
  • Subprime credit cards that are aimed at people with low credit ratings

Affordable Credit available locally

Credit offered by high street banks is not available to everyone especially if you have a poor credit rating.  There are more affordable options available even if you have a low credit rating or are out of work.

Credit unions are community based organisations that offer a range of products and services. They are not-for-profit organisations so any money they make is used for the running of the organisation. They encourage saving and they also offer loans. Loans from credit unions are referred to as ‘affordable’ as they’re based on what you can afford to pay back. The interest that credit unions charge is much lower than the interest charged by doorstep lenders or pay day loan companies. Interest rates will depend on your circumstances, but the maximum rate that can be charged by a credit union is 3% per month (APR of 42.6%). You may still have to pass a credit check.

Moneywise Credit Union Ltd and NEFirst Credit Union both offer low cost loans to their customers. Credit unions rely on members’ deposits to provide loans. When you join a credit union you’re expected to save some money regularly. This helps other members with loans and to get into the habit of saving money. For instance, they have a family loan where you pay your child benefit into your account to secure the loan.  You can also have an account based on your benefits to help secure a loan. You need a National Insurance Number or someone like a social worker to verify who you are.

They can help you to improve your credit rating with a Credit Repair Loan. Other personal loans that they offer include: budget accounts and starter loans.

The Department for Work and Pensions (DWP) can award interest free Budgeting Loans or Universal Credit Budgeting Advances to help you pay for essential things, such as furniture, clothes, moving costs or hire purchase debts. You must be in receipt of certain benefits and for a certain period of time. The loan is paid back by direct deductions from their benefits.

Street UK provides short-term personal loans online. Their interest rate is higher than Credit Union.

Newcastle City Council has more information on budgeting and making good decisions borrowing money.

Grants and support from charities instead of borrowing

Charities have some funding available to help people in need to buy essential items. Use the websites below to find a grant that can help you in your situation. If you are on a low income check if you can get the items that you need from any charities first. Borrowing money means that it needs to be paid back over a period of time. This reduces your weekly or monthly income for that period, which can cause hardship.

Turn2us is a charity where you find charitable funds and grants to apply for, when you need money for essential things in life. For example, furniture, household items, white goods, electrical items, studying, bringing up children, experiencing life changing circumstances and more. They have a telephone helpline, benefits calculator and online information.

Second hand charity shops sell toys, clothes, prams, and household items cheaply. Check if you can buy what you need second hand. Read our pages on

Make sure you’re claiming any benefits you’re entitled to

If you’re entitled to welfare benefits make sure that you’re claiming the full amount that you’re entitled to. A local independent advice service can help guide you through the process such as:

There are more benefit advice services in Newcastle. Read the ‘Where to get benefit advice booklet.

Buying items on credit

Before buying a new item, you may be able to find it cheaper second hand, or apply for grants to help, as explained above. However if you can’t do this, you may be able to buy essential items using online lending companies.

Many high street retailers, such as Currys, offer credit options, where you can spread the payments for the thing you wish to buy over a number of weeks, months or years. They may offer an option to buy now, pay later. These companies charge interest on these payments, which means you will pay more for the item you are buying. They may carry out a credit check before you can purchase an item and only offer these deals to people with a good credit score.

It is worth shopping around to find the best and most affordable deal for you. You will need to make regular payments for the items you buy. Read more about managing your money and budgeting on InformationNOW.

Fair for you is an alternative to high cost weekly payment stores. It’s a not for profit, online lending company, set up for the benefit of people who are unable to get mainstream credit. They offer support to buy household appliances, laptops, prams and furniture such as beds, sofas, tables and chairs. Use their loan calculator to see how much you will pay in total.

Smarterbuys is an online alternative to expensive, high interest stores to buy essential home items, such as household appliances, electrical items and furniture. You need a bank account or credit union account to use this service. Smarterbuys work with a number of housing providers and social landlords. Using this service involves taking out a loan which you pay back across a number of months. You are charged interest, so you pay more for the product. They’re a charity that’s regulated by the Financial Conduct Authority.

Other Useful Information

Last updated: May 16, 2024