Over 1m Brits in debt to predatory loan sharks amid cost of living crisis
An estimated 1m Brits have fallen victim to predatory local lenders because they are unable to cover basic costs according to fresh data.
The Centre for Social Justice (CSJ) estimates that as many as 1.08m Brits are indebted to a loan shark, 700,000 more people than the last official study identified. Almost two thirds of victims, some 62 per cent in 2021, had an income of below £20,000 a year with 45 per cent of victims saying they borrowed the money to cover everyday costs, including council tax, gas and electricity bills as well as essentials such as school uniforms and push chairs.
Disturbingly, the report found widespread evidence of loan sharks demanding sexual favours as a form of repayment from their victims, with these demands often explicitly written into the contracts borrowers are forced to sign.
“I’m scared of what he can do,” Anna, a 38-year-old woman, told researchers. “I had to sleep with him because I couldn’t afford the payments. I feel unclean…I knew it was wrong, but he took a photo of my daughter coming out of school and sent it to me saying: ‘We now know what she looks like.’”
The report found that loan sharks initially befriend victims to win their trust before lending them money with over half of victims said that they considered the lender a friend when they first borrowed according to the CSJ. Loan sharks often go on to exploit their victims using psychological manipulation and in some cases violence to exact a repayment that rarely resembles the amount borrowed.
A victim named Abby borrowed £3,000 from a loan shark to pay off her brother’s loan and cover some household bills. She ended up repaying £20,000 to the loan shark over the course of 2-3 years. A 22-year-old man took his own life after his debt of £300 spiralled to £3,000 in just 12 weeks.
Borrowers are often pushed into an unregulated market for securing a loan because they are rejected from legal sources first – 80 per cent of those who attempt to borrow from legal lenders are declined. The situation is likely to worsen as the cost of living crisis sets in, the CSJ warned, calling for the government to take action to protect economically vulnerable individuals.
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