Where from? Bona fide ones: mainly through newspaper advertisements.

How they work They specialise in high-risk lending and charge dearly as a result. Loans may be secured or unsecured. Interest rates may be fixed or variable. They may lend to you even if you've been unable to borrow elsewhere. Repayments are often collected door-to-door.

Points to watch At the time of writing, moneylenders who lend sums in excess of £60 have, by law, to be licensed. (And there are proposals that even those lending smaller sums should, in future, need a licence.) But some moneylenders make loans above the £60 limit without being licensed - they trade illegally. Such lenders are sometimes known as `loan sharks' and usually charge high interest rates which, in some cases, work out at APRs of several thousand per cent. But even licensed moneylenders can charge fairly steep rates of interest and are generally an expensive source of credit. If you suspect that a moneylender is unlicensed, report them to your local Trading Standards Department or the police. If you feel hopelessly in debt to a moneylender, you should seek help from a debt counsellor ).

Verdict Avoid.

WARNING Moneylenders, both licensed and unlicensed, have been known to ask for (and, in some cases, seize) child allowance, pension or social security benefit books as security for loans. This practice is illegal. Never part with these documents in such circumstances. Inform the police or the Trading Standards Department if a moneylender suggests such a course of action.

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Credit Unions

Where from? Run by the members who all have something in common - for example, they live in the same area, go to the same church, or share the same work.

How they work These are savings and loan co-operatives. Regular saving is encouraged but members can save any amount from £4 up to £4,000. The savings form a pool from which any member can borrow. The maximum you can borrow is £4,000 more than the amount you have saved. The maximum interest rate is set by the Credit Union Act 1979 and is currently fairly low (12.68 per cent APR). Similarly, the maximum interest rate paid... see: Credit Unions

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