HUNDREDS of people in Glasgow have been saved from using loan sharks by a new credit organisation.

Scotcash was set up seven months ago with the support of Glasgow City Council, Glasgow Housing Association, the Scottish Government, and its agency Communities Scotland.

It aims to help people who are considering turning to expensive personal credit companies or illegal money lenders because they have been turned away by banks.

This week the organisation is expected to agree its 500th loan - half its target for the first year.

Scotcash, a non-profit making organisation. has approved 486 loans totalling £256,262 - representing a £124,000 saving in interest payments for those who have borrowed the money.

Over the next 20 years it expects to lend £42.6million to almost 63,000 city residents, saving them £29m in interest.

A £200 loan from Scotcash taken out over 32 weeks at 48.16% interest would result in total repayment of £225.

Some personal credit companies offer loans with an APR of almost 282%, with total repayment on a £200 loan being £320.

Loan sharks are known to charge exorbitant interest rates well over 1000% and bring with them the threat of violence in the event of non-payment.

An estimated 45,000 people in Glasgow borrow small sums of money from home credit companies, at a typical interest rate of 164%.

City leaders realised borrowing money from loan sharks or expensive personal credit companies was making poverty and deprivation worse and decided to take action.

Scotcash general manager Leah Cameron said: "Some people come to us because they are not working and banks do not include certain benefits in their calculations.

"Also, banks will not lend less than £1000 - and in some cases £2000 - and the people who come to us usually do not need that amount.

"The people we help are looking for funds of around £250 or upwards. For example, we are already getting enquiries from people looking for a couple of hundred pounds for Christmas.

"We know many of our clients are using illegal money lenders. Many of the cases are very sad and we realise how it is impacting on lives and that they have reached the end of the road."

Scotcash has financial advisers and will tell people to go to a high street bank for a lower interest rate if they believe they qualify for a loan.

They will also suggest that people who can afford it should start saving with a credit union, again entitling them to lower interest rates.

The Scotcash office is at 55 High Street. The service can help Glasgow residents only.