DEBT HELP
More of us are turning to loan sharks to deal with debt. Here’s where to go instead
The cost of living crisis is driving people to loan sharks, debt charities have warned, as the number of people seeking debt advice soars.
Debt advice organisation Step-Change has seen client numbers climb by nearly a fifth (17.7%) between the first half of last year and first half of 2023, new data shows. In June, more than a quarter (26%) of StepChange’s clients attributed their mounting debts to the ‘cost of living increase’ – up from just 7% in September 2021. Stubbornly high inflation and soaring interest rates are pushing household budgets “to the limit”, warns Richard Lane, StepChange’s director of external affairs, forcing people to turn to borrowing. “In the most extreme cases, some will even turn to loan sharks to make ends meet,” he says.
Ethical lenders – organisations that offer safe sources of credit to low-income borrowers – are competing with illegal, high-interest lenders.
In June, research from Ipsos and Fair4AllFinance suggested that more than three million people have borrowed from an unlicensed or unauthorised money lender over the last three years.
“The problem really for us is reach, and whether we can reach those people that need us before they find bad players like loan sharks,” says James Wilkinson, head of Credit Risk and Lending at Fair for You.
Fair for You was established in 2015 – with backing from Big Issue Invest – to provide affordable loans to those who might find themselves rejected by prime
