PPI Claim News - 18/1/2010
Bank charges: Families seek out loan sharks as consumer credit drops
The number of families forced to seek out loan sharks for credit has soared as consumer borrowing falls, a survey reveals.
The Real Cost of Christmas, a report published by Circle Anglia and authored by the Financial Inclusion Centre thinktank, found that 100,000 people borrowed money from illegal lenders this festive season, totalling over £29 million in unregulated loans.
However, with an average APR of around 825 per cent the amount which is repaid directly to the loan sharks is expected to be much higher.
A sharp decline in consumer credit during the recession has been blamed for the high numbers of people turning to "irresponsible" lending.
Latest figures by the Bank of England show consumer credit fell by £0.4 billion in November, compared to that of six months previous. Other finance loans and advances also fell by £0.6 billion.
Faisel Rahman, board member at Debt on our Doorstep, a UK campaign against illegal lending, said that as the banks pull out of lending, illegal money lenders are filling the gaps.
She urged people facing financial difficulties to turn to not-for-profit financers such as their local Credit Union or community finance organisation for credit.
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