Families struggling to keep up with the rising cost of living are being warned of the dangers of loan sharks.
Agency Stop Loan Sharks said more than half of the victims it helped last year took out loans to pay for basic necessities like food and fuel.
The warning comes as UK prices are rising at their fastest pace in 40 years.
One woman told the BBC she borrowed £100 from a neighbor’s sister and paid back nearly £1,000 a month – almost her entire pay packet.
Kelly, not her real name, could foot the bills. But as children grew, the fridge emptied as fast as she could fill it.
But after accepting a “friendly” offer to borrow £100, demands to pay back £325 came the next month, making it even harder for Kelly to cope.
“Because it was a bit short for me, I would rent it again,” she said. “And then I just kept borrowing and borrowing just to keep myself afloat.”
Also, she was charged exorbitant interest rates for other payments she did not request.
“There were times when I would wake up in the morning and check my bank and just happened to have £100 in my bank. It brought me down even more because she wouldn’t let me send her back”.
Eventually, Kelly says she was threatened. She was told a gang was responsible for her loan shark and if she didn’t pay back the full amount, her family would suffer, she said.
About £900 of her £1,048 monthly salary went straight to the loan shark. Kelly said she had frequent thoughts of suicide because her family was hanging by a thread.
“When we went into lockdown in 2020 and we got these meal vouchers from the school, that’s how we survived, just on these vouchers,” she said.
- “I borrowed £50 and we became homeless”
- ‘My £28,000 unpaid debts have pushed me to the brink’
Informal, one-time loans between friends are not against the law. But lending to large numbers of people, often with no paperwork, high interest rates, and threats to get those repayments is illegal.
As more people struggle this year and payday loan companies like Wonga and Quickquid go out of business, there is concern that more people will turn to illegal lenders to make ends meet.
Figures from the England Illegal Money Lending Team, the government agency behind Stop Loan Sharks, say nearly one in 10 people who borrowed money from loan sharks last year did so to help cover the costs of Christmas.
Cath Williams of Stop Loan Sharks said the number of people turning to illegal lenders has increased significantly over the past decade and the cost of living crisis is a major concern.
It has assisted more than 400 victims in obtaining evidence and prosecuting loan sharks in the first six months of this year.
The first thing to be clear is that you have not committed a crime. You are a victim.
Most people don’t realize that they first borrow from a loan shark. They think the person is a friend or a neighbor. So if it took you a while to realize that this is a loan shark, you are not alone.
You can call the Stop Loan Sharks hotline or visit their website to confidentially report a loan shark or seek advice.
If a loan shark shows up at your home or you are in imminent danger, your best bet is to call emergency services.
Also, remember that friends and family are the best people to turn to when someone is a loan shark victim. If you are concerned about them, you can also refer them to Stop Loan Sharks.
“For the first time, we’re seeing people turning to illegal lenders for food and fuel,” Ms Williams said, with more than half of the people helping them borrow money from a loan shark to pay for essentials.
“In the past it was always daily living expenses, things like appliances, tires or school uniforms, but now more than half of the people we have supported in the first half of this year are borrowing food and fuel from loan sharks,” she added added.
The agency, which works with police to secure law enforcement and provide emotional support to victims, said high inflation, energy bills and the added huge pressure of Christmas are a perfect storm.
“Loan sharks will find a vulnerability and exploit it. They don’t do affordability checks, they don’t care if you can pay your rent or put food on the table. They just want to take as much of your money as possible to sate their greed,” Ms Williams said.
She also advised against getting a friend or family member to pay off the debt as “it just shows you have access to cash.”
She said, “The best thing a friend can do is support them in coming to us.”
In the end, Kelly did just that. With the help of friends and her housing association, she called Stop Loan Sharks and began putting her life back together.
“The only advice I would give is to get help right away, it’s never too late, don’t assert yourself.”
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