For those unable to secure a loan

The coalition Government has introduced a new scheme aimed at borrowers with a poor credit history or those on a low income.

My Home Finance has been set up by the Government and the National Housing Federation (NHF), with 10 branches opening across the West Midlands by the end of next month.

If successful, the scheme will expand throughout the UK from April 2011. The branches will be situated in busy high streets and shopping centres.

It is also hoped that the scheme will discourage people from borrowing from loan sharks.

The scheme, operated in collaboration with the Royal Bank of Scotland, will charge a typical APR of 29.9%.

However, when the scheme is rolled out across England, the interest will increase to 49.9% to cover costs.

Doorstep and pay-day lenders charge anything between 200% to 2,000%.

Meanwhile, commenting on the launch, NHF chief executive David Orr, said: “By offering fair loans at fair prices, we hope to offer an alternative to both loan sharks, who cynically prey on hard up families, and doorstep lenders, who are all too willing to lend cash to the desperate at hugely inflated rates of interest.”

However, Mick McAteer, of the Financial Inclusion Centre, said: “While this is a welcome step, it should be put in context. We estimate there are four million people in the UK without access to mainstream affordable credit. More needs to be done to give consumers a real choice.”