Debt advisors concern over loan sharks

01/06/2009

Loan sharks are causing concern among debt advisors as the recession wears on, it has been suggested.

The Money Advice Trust said today that customers who were worried about their finances should seek specialist debt counselling, rather than turn to the illegal lenders.

Last week, the Local Government Network released a study showing that 35,000 people could get involved with the sharks - who usually charge very high rates of interest on their loans - due to the current financial downturn.

Commonly, customers who take this option are unable to find credit elsewhere due to poor past repayment records.

This means that they are already likely to have been turned down for loans both by high street banks and regulated "doorstep" lenders who have an easier credit policy.

Beccy Wilks, spokesperson for the Money Advice Trust, said: "For people on a low income or those who struggle to get access to mainstream credit, credit unions and the social fund can be affordable solutions."

She added: "It is important that vulnerable communities (i.e. at risk of financial and social exclusion) have access to support and advice about financial problems to try and prevent illegal money lenders working in those areas."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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