Loan sharks set to profit from recession misery
Financial difficulties caused by the recession will drive up the number of consumers borrowing money from illegal lenders and loan sharks, the Money Advice Trust (MAT) warned this week.
Brits seeking a quick cash injection will be tempted by the lure of easy money that loan sharks appear to offer.
“It could be that someone is worried about not being able to pay a utility bill so may consider borrowing money to pay off the debt,” said Beccy Wilks, MAT spokesperson.
The MAT’s warning follows estimates by a Government thinktank that up to 35,000 people could be forced to turn to illegal money lenders because the credit crunch has made it more difficult to borrow from traditional channels.
“The diminished availability of regulated sub-prime credit is creating conditions where a sizeable number of people have little option but to borrow from illegal sources,” said Chris Leslie of the New Local Government Network thinktank.
The MAT advises those in financial difficulty to seek free advice rather than turn to loan sharks, who often charge extortionate interest and use violence to guarantee repayments.
“If you are in a situation where you feel that you need money quickly, it’s a good idea to get free debt advice first from National Debtline, Consumer Credit Counselling Service, or Citizens Advice Bureau,” Wilks said.