Loan sharks warning from Bromford
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CASH-STRAPPED customers are being warned not to cover the cost of their festive overspends by borrowing from loan sharks.
The warning comes from Ella Atkinson, home income manager with Bromford, as tenants count the cost of Christmas and - in some cases - find themselves struggling to buy the basics.
A few hundred pounds borrowed in haste from a loan shark could quickly turn into a four or five-figure debt, with many customers facing verbal and physical threats - and little chance of ever paying it off.
It's far better, says Ella, to borrow money from a credit union or one of the new My Home Finance shops launched in Birmingham, the Black Country and elsewhere in the West Midlands by the National Housing Federation with support from housing associations like Bromford.
"The West Midlands is one of the country's loan shark hotspots so we are always concerned about people borrowing money from these ruthless opportunists," says Ella in a new year warning to Bromford tenants and their neighbours. Bromford is one of the leading social housing groups in central England with more than 26,000 homes.
"It's a particular problem at this time of year. We understand, for instance, that parents may have spent more than they can afford over Christmas, may now find themselves unable to buy the basics and may think borrowing money from their local loan shark could be the answer.
"But the truth is that sharks are never a good option as they can be violent and operate outside the law. We would strongly urge people not to borrow from them under any circumstances."
Her message comes in the wake of a Stop Loan Sharks warning from the Office of Fair Trading and Trading Standards' illegal money lending team.
According to Stop Loan Sharks campaigners, as many as 165,000 households use illegal lenders and half of those householders are in the most deprived areas of the country - with the West Midlands being one of the worst-hit.
James Walsh, Bromford's economic inclusion manager, says people resort to doorstep lenders because they are usually excluded from the mainstream banking system and cannot access credit any other way.
He urges tenants and other cash-strapped consumers to borrow from their local credit union or one of the new My Home Finance shops around the region.
James said: "It's shocking that the people who can least afford it feel they have no option but to borrow from doorstep lenders or loan sharks - often at sky-high rates of interest that can be anything from 200 to 2,000%.
"Cheaper, legal lending (see example below *) can truly change people's lives. They have a realistic chance of paying off their debt and have more left over to spend on their families."
Anyone lending money should have a consumer credit licence from the OFT. Licensed lenders have to comply with legal obligations in dealing with customers, including the use of proper paperwork and fair collection methods.
This is not the case with unlicensed loan sharks, who will often offer cash loans without paperwork, use benefit or bank cards as security, and threaten or use violence to get money.
Bromford tenants who want debt-related help or advice can call 0330 1234 034 or visit our website and find links for the National Debt Line, Credit Action and other useful websites. The My Home Finance website is at www.myhomefinance.org.uk (opens new window)
* Example of My Home Finance lending compared with typical doorstep loan at 272%
|AMOUNT BORROWED||TERM OF LOAN||TOTAL TO REPAY|
|Doorstep lender||£300||52 weeks||£546|
To find out more about relevant APRs and other financial details, the My Home Finance website is at www.myhomefinance.org.uk (opens new window)