Recession Putting Thousands At Risk Of Loan Sharks

Tue, 26 May 2009

Up to 200,000 people in Britain are at risk from loan sharks because they cannot access credit from traditional lenders, an independent think tank has warned.

A report by the New Local Government Network said the reduction in sub-prime (door-step) lending combined with the economic downturn is forcing increasing numbers of people to turn to illegal money lenders, who charge extortionate rates of interest .

The group predicts an additional 35,000 people are likely to use loan sharks as a result of the recession, in addition to the estimated 165,000 who already borrow from them.

It is urging local authorities to put additional resources into local credit unions, which provide an alternative source of borrowing for people who cannot access high street loans, as well as using council banks to help such consumers.

Author of the report Chris Leslie said: "There is evidence to suggest that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or loan sharking, is making a comeback."

"The diminished availability of regulated sub-prime credit is creating conditions where a sizable number of people have little option but to borrow from illegal sources. At least 165,000 people already use loan sharks in the UK and we can expect the number to rise sharply."

He added: "Further intervention from local government is a crucial next step and we look forward to strong leadership from the sector at a time of great urgency."
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