Deduction Lending: Does it add up for Low-Income Borrowers?


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Swoboda was delighted to collaborate on a project led by the Financial Inclusion Centre to examine credit union deduction lending and its benefits for low income borrowers in Britain – where repayments are automatically taken at source from either salary (payroll deduction) or non-means tested child benefit (benefit deduction).


The research, funded by Fair4All Finance, provides powerful evidence that these lending models are popular, advantageous and overwhelmingly positive in terms of the beneficial impact it delivers for the borrower. It also has the potential to scale up and offer access to low-cost lending for more financially vulnerable households who might otherwise have few options beyond high cost or informal credit options.