Around 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 by the think tank Financial Inclusion Centre.

The report claims that around 100,000 more people from the UK's poorest families have borrowed 29 million from loan sharks to get through Christmas and will now start the year crippled with debt. It is estimated that these vulnerable families will pay back around three times the amount they borrowed.

The report says that on average people borrowed £288 with an interest rate of 800%, but for some this rate could go even higher with the average expected repayment period being one year.

Debtwizard comment

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 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.

You can more on this at our Debtwizard guide to loan sharks