Poorer households 'targeted by loan sharks'

15/01/2010

Some of the poorest households in the UK have been targeted by loan sharks over the Christmas period.

A combined debt from loan sharks of £82 million was accrued over the Christmas period in 2009, according to a report from the Financial Inclusion Centre.

The loans themselves are valued at £29 million, but enormous interest rates of up to 825 per cent pushed the repayment value to more than twice the original amount.

Andy Doyland, chief executive of operations at Circle Anglia, who commissioned the report, said: "These figures are very concerning and demonstrate the scale of illegal lending across the UK."

The report also found that there had been a 22 per cent increase in the number of people using loan sharks in the past three years.

In 2009 alone, an estimated 200,000 people borrowed money from loan sharks, with an average loan of £300.

Director of EuroDebt Kevin Still commented: "Lending restrictions on the high street have played right into the hands of home credit providers, ‘pay day’ loan companies, pawnbrokers and illegal loan sharks.

"EuroDebt sees many people start a Debt Management Plan only after having used very expensive credit that has created a debt spiral."

Tags; Income Worries and Debt,

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