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Move Over High Cost Lenders: New Product Proves it is Possible to Reduce the Cost of Credit PDF Print E-mail
Friday, 22 July 2016
A new product has launched today which provides a long-awaited alternative to expensive payday loans and emergency overdrafts.  

High street lenders have profited from customers in need of fast cash for years and, as MPs and consumers groups criticise banks for their punitive emergency overdraft charges, Drafty pledges to shake up the expensive high cost, short-term credit market.

Drafty keeps the speediness of overdrafts and payday loans for individuals in need of emergency cash, whilst slashing the cost and interest rate. According to Which? the cost of borrowing £100 from some banks for 28 days amounted to as much as £90 in charges. The equivalent from Drafty costs just £5.04.

Here’s how Drafty works. Subject to affordability and eligibility checks, customers set a limit, and can draw cash up to that limit at any time. Money is usually transferred in minutes. Customers only pay interest on what they use – without any fees – and can save the rest as a safety net for later.

Earlier this month, the Treasury Select Committee also expressed concerns about the costs of overdrafts and the challenges for consumers in finding out the true cost of borrowing. Andrew Tyrie chairman of the Treasury select committee, stated “Consumers need to know what they are being charged for their banks accounts, especially their overdrafts. At the moment, they often struggle to find out.”

The Competition and Markets Authority has found that unarranged overdrafts generated about £1.2bn of revenues for banks in 2014. [2]

Drafty is the brainchild of Global Analytics – a member of the Consumer Finance Association and an established Fintech company that’s leading the consumer credit market through constant innovation of its underwriting and customer offering. Chief Executive of Global Analytics, Chris de Boer says: “Global’s mission is focused on supporting our customers in their journey toward a better financial future. Our goal is to create transparent, fair and responsible products for all consumers. Drafty is one innovation and more will follow.”

Russell Hamblin Boone, Chief Executive of the Consumer Finance Association says: “The range of products available from the non-standard finance sector continues to grow. This is a reflection of the demand from people looking for convenient and flexible credit and the supply of innovative loans that are suited to modern, tech- savvy consumers. The use of technology and powerful data analytics has been crucial to providing this choice, while ensuring lending decisions are made responsibly.”

Mark Fiander, VP of Marketing at Global Analytics says: “Drafty represents a growing movement to deliver fair, transparent credit options for consumers. It’s a new, fee-free way to access credit that could be a cheaper alternative to an overdraft for people paying excessive bank charges. This is about providing an affordable option to people who need credit, and are being squeezed by the limited choices currently in the market.”
 
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