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Britons to borrow £82 million from loan sharks in 2010
Monday 1st February 2010New reports have revealed that borrowing money from illegal loan sharks will load more than 100,000 families with a combined debt of £82 million to pay this year.
The report, titled ‘The Real Cost of Christmas’ by think tank the Financial Inclusion Centre showed that hard-up families borrowed around £29 million from loan sharks over Christmas.
On average, families borrowed £300 from loan sharks to help with the costs of Christmas, however with extortionate interest rates of between 800% and 1,500% vulnerable debtors will be forced to pay back more than £800.
The downturn has meant that many Britons are feeling the financial strain and turning to various different methods to get their debt problems back on track. Whilst hundreds of thousands of people have sought debt advice and taken out debt management plans or individual voluntary arrangements (IVAs) to improve their situations, others have turned to illegal doorstep lenders.
The activity of these illegal lenders is on the rise, with the use of loan sharks over the last three years estimated to have increased by 22%. This means that the number of households borrowing money in this dangerous way has leapt from 165,000 to 200,000 since 2006.
Consumer minister, Kevin Brennan, has commented: “The Government has created specialist Trading Standards illegal money lending teams around the country so that they can come down hard on loan sharks. The teams have helped more than 10,000 victims and written off more than £30 million of illegal debt. They have already secured around 50 years in prison sentences, helping to rid communities of these criminals.”
He added: “I’d encourage anyone who feels trapped by a loan shark to get help and advice as soon as possible.”
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