UK's Poor Forced Into Debt By Doorstep Loans

Mon, 10 Dec 2007

Millions of poor UK families are being taken for a ride by loans salesman, a new report has revealed.

Parents with low incomes are being conned into taking cash and then agreeing to pay it back in weekly instalments to doorstep salesman as it is their only option of credit left open to them.

However, they are then faced with even more hardship due to the extremely high interest rates (as much 200 per cent in some cases). For example, a £500 loan can lead to repayments of £840.

The report, carried out by Save The Children, revealed around 2.3 million families in Britain use such doorstep loan firms, including industry leader Provident, which charges a typical 183 per cent interest .

In addition, the research found that 50 per cent of those surveyed have no alternative means to accessing credit, while almost 60 per cent have no savings - leading to an increase in borrowing to cover unexpected costs.

One in three who get into credit problems state they cannot afford decent clothes or shoes ; a quarter struggle to buy food ; 20 per cent cannot afford heating for their homes and more than 90 per cent can't afford to go on holiday .

Spokesman Jason Strelitz commented: "This report is highlighting a double penalty for many of the poorest families in the UK . Income poverty is being compounded by exorbitant credit costs."

Save The Children also found that over one million children are living in severe poverty - the equivalent of an adult and two children surviving on £19 a day.

In response to the survey, Ministers admitted around 3.8million children are living in poverty, with family income below 60 per cent of the national average.

The charity group has urged the Government to give extra financial aid to the poorest families .
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