Illegal lenders 'should never be approached' in cheap loans quest
Some Britons have been hit with interest rates of 825 per cent after securing what they thought were cheap loans from illegal lenders.
Britons searching for cheap loans have been strongly advised to avoid approaching illegal lenders.New research, conducted by thinktank the Financial Inclusion Centre and published by Circle Anglia, has suggested that as many as 100,000 UK consumers attempted to secure deals from loan sharks over the recent festive period.
According to the study, which is entitled 'The Real Cost of Christmas', the total value of these transactions reached an estimated £29 million.
However, the average interest rate charged on the illegal loans was found to be 825 per cent APR, with the cost of repaying the debt standing at a staggering £82 million.
Faisel Rahman, board member of fair financial services campaigner Debt on out Doorstep, explained that consumers should never be tempted into making an agreement with a loan shark.
He said: "As banks have pulled out of lending to individuals, many of the traditional lenders that people might have gone to are not lending to people any more.
"As they pull out, lots of illegal money lenders are filling the gaps. The gaps are often just for basics like washing machines, cookers and, in some cases, Christmas presents.
"One of the things that's clear about illegal money lending is that it's not just the financial cost of the loan that you are going to bear. You are going to bear maybe verbal, emotional or even physical threats against you."
Mr Rahman also noted that the government is attempting to crack down on loan sharks at present, having afforded the police more power to target and imprison the offenders.
Last week, a report published in the Independent urged Britons to pay off any cheap loans they decided to take out during the festive period as quickly as possible.
Written by Kevin Shield
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