Christmas Loan Shark Victims In GBP82 Million Debt

Fri, 15 Jan 2010

Thousands of families across the UK have been saddled with huge debts after borrowing from loan sharks to help fund Christmas, a new report has revealed.

The Real Cost of Christmas report, authored by the Financial Inclusion Centre and commissioned by affordable housing provider Circle Anglia, found that around 100,000 of the UK’s poorest families took out an estimated £29 million in loans from illegal doorstep lenders over the festive period – an average of £288 per family.

However, with interest rates on the loans averaging 825 per cent, the report said households can expect to repay an average of £820 this year – nearly three times the initial amount they borrowed.

Andy Doyland, chief executive of operations at Circle Anglia, said: "We hope that by turning the spotlight on loan shark activity we can help more people to seek help and get sound financial advice ."

"A simple step such as borrowing from a credit union or a community finance organisation instead of a loan shark could have saved the typical low-income household £500 in debt repayments - more than enough to fund the whole of Christmas 2010 as well."

According to the report, the number of Brits turning to loan sharks for help has increased by 22 per cent over the last three years, from an estimated 165,000 in 2006 to 200,000 a year in 2009.

Mick McAteer, director of the Financial Inclusion Centre, said the rise in loan shark activity was being driven by the recession.

"Because of the financial crisis, the High Street banks are restricting the access to loans to those people they consider to be low risk or [have a] higher income," he explained.

"That tends to push more and more people out into the hands of loan sharks ."
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