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20 December 2005
The pitfalls of doorstep loans have been reiterated by the Housing Corporation, who have warned that £37 million too much will be paid in interest to such lenders this month alone.
People without access to affordable credit are frequently targeted by unscrupulous dealers, with some seeing fit to charge interest of as much as 600 per cent. Loan sharks can be even more damaging - one from Birmingham was convicted recently after he demanded as much as 8,000 per cent interest.
Jon Rouse, chief executive of the Housing Corporation, explained that people could see their very livelihood risked by taking up such borrowing options.
He said: "At Christmas, every parent is under the same pressure to make it special for their children. But if they borrow from doorstep lenders, they risk the roof over their heads in return for a day's happiness.
"Social landlords like housing associations can really make a difference, by helping financially excluded residents manage their money around Christmas and offer a real alternative to doorstep loans at shocking interest rates."
The Housing Corporation noted that a typical interest rate of 497 per cent from a doorstep lender would, on a loan repayable over 23 weeks, see a £137 loan cost £201.68 to repay.
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