A NEW low cost loan which saves cash strapped residents entering a never-ending cycle of debt has won the backing of the city council.

The Wee Glasgow Loan is a fairer and cheaper alternative to short term, high cost schemes run by loan companies and rent-to-own shops which can cause misery for city families.

It is operated by Pollok and BCD Credit Unions and supported by the local authority and has a low 2% interest rate.

Payments are based on what people can afford and the Wee Glasgow Loan has none of the "toxic" features operated by many other lenders.

That includes no hidden fees or late repayment charges, no penalties, threats of repossession or long-term binding repayment contracts.

Although the scheme is open to all city residents, it is targeted at the estimated 100,000 city residents, including people on benefits, who have no option but to repeatedly rely on non-mainstream, high-cost credit and use rent-to-own companies to buy white goods and high priced items which are paid up over a long set period of time.

City council leader Frank McAveety, who launched the scheme, said: "We know a high percentage of our citizens are unable to access mainstream credit due to poor credit history, low income, not knowing what the alternatives are and consequently are charged well over the odds for the cost of credit.

"These people are being taken advantage of because they feel they have nowhere else to turn and need money or need to buy say a washing machine quickly.

"They will be able to borrow and pay back based on their own particular financial circumstances and more importantly, find out more financially sound ways of saving and low cost borrowing to get in a financially steady situation."

Jim Garrity, operations director of Pollok Credit Union said: "For too long now, some payday lenders and rent to own companies have used their position of strength to pray on the most disadvantaged and those in greatest need, often trapping families in an abusive and expensive cycle of debt.

"Pollok Credit Union is committed to providing innovative savings and loan services that are ethical to the communities we serve.

"With a Wee Glasgow Loan customers will make considerable savings on interest payments compared to using payday lenders.

"We are proud to be part of this project to provide a fair and equal access to affordable credit and financial products and indeed the wider city plan to tackle poverty."

The Wee Glasgow Loan has been set up in direct competition to big name lenders and the application process is easy with a quick decision and pay out.

It will also give applicants access to more traditional credit union products such as savings and affordable credit to stop them paying a poverty premium.

Applicants who do not meet the criteria for a loan will be referred to a financial support service with free advice sessions that will review their financial circumstances and help them get back some financial stability.

To apply for a Wee Glasgow Loan go to Wee Glasgow Loan.