With the loans market still severely restricted in the UK many poorer households have been turning to loan sharks to get some cash for Christmas, and this has resulted in many starting 2010 in severe debt.
As most people are aware the loans and finance markets have been very restricted over the past couple of years, and borrowing money has become very difficult for many people, particularly people from low income households. Desperation has led to many of these people looking for alternatives to get the cash they need, and officials have said that this has resulted in many poorer people kicking off 2010 in severe debt.
Many of those that have been unable to get the money that they need on credit cards and loans from traditional lenders have turned instead to unscrupulous loan sharks over the Christmas period so that they have the money to fund the cost of the festive season. However, this could have left many of these people struggling severely with a high level of debt to deal with and little in the way of protection.
Worryingly figures that were released by the Financial Inclusion Centre recently have suggested that around one hundred thousand families borrower money from an illegal lender totally around twenty nine million pounds. Some of these lenders were charging interest at around fifteen hundred percent, and on average borrowers would spend the next year repaying the money.
One woman that was taken in by a loan shark said: “If you’re absolutely desperate for money and this guy comes up to say ‘I’ll give you 500 quid’, you think ‘OK, I’ll have that’ It was a £500 loan to begin with and they were charging £30 a week, so in all on a £500 loan I must have ended up paying back about two or three thousand pounds.”
Source - BBC