200,000 people in Britain are at risk from illegal loan sharks because they cannot access credit from traditional lenders according to a new report published.
A combination of the reduction in sub-prime lending, often known as "door-step lending", and the economic downturn may lead to more people having to use illegal money lenders according to the independent think tank the New Local Government Network.
The report predicts that an additional 35,000 people are likely to have to use loan sharks during the recession but admit that the figure could be even higher. The think tank is urging local authorities to put additional resources into local credit unions and even to use new Council Banks to offer affordable credit to people who can't access high-street loans.
NLGN warns that the legal sub-prime market has declined since the recession. It predicts that an additional 250,000 people will lose access to doorstep lending under the downturn. This period has also seen the number of loan refusals by the Government's emergency Social Fund increase from 316,000 to 596,000. The report warns that customers who would have previously used these services may now have to turn to loan sharks.
It argues that local authorities need to step in to protect vulnerable people in their local community by offering a range of support including more Credit Unions, mapping predatory lending and enhancing enforcement against loan sharks.
Debtwizard comment
According to the English thesaurus a 'loan shark' is a 'swindler', 'crook', 'double-dealer' or 'con artist'. I can't really argue with that but what is clear within the law is that a 'loan shark' is an unlicensed moneylender, they do not have a consumer credit license, therefore they cannot take any legal action to reclaim any monies they may claim you owe.
A loan shark will lend to those that are desperate and vulnerable and who really do not understand the interest rate and what they are getting into.
Unfortunately individuals have to go to loan sharks as a last resort because previous sub prime lending has virtually dried up.
I cover a very useful article on how to find out if you are dealing with a 'loan shark', what to do if you are harassed and where you can get help. Click here for the article on loan sharks.
