Credit Crunch Sees Return of Loan Sharks
One of the results of the credit crunch means that more and more people are struggling to get their loan application accepted. The worry is that loan sharks are targeting those who are the most financially vulnerable. Consequently thousands of people could be forced to seek a loan from a loan shark because they cannot borrow money in a legal manner.
The New Local Government Network has warned that 35,000 more people will use illegal loan sharks as traditional loan sources dry up and their loan application gets turned down time after time.
Apparently 165,000 people already use loan sharks in the UK, and the organisation is calling for additional resources to be put into credit unions by local authorities, so that people who have been refused bank loans have an alternative source of borrowing which does not include loan sharks.
Chris Leslie, author of the report, commented: “There is evidence to suggest that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or loan sharking, is making a comeback.
“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.”
