Beware of doorstep loans

It has been revealed that millions of low-income families are turning to doorstep lenders in order to shore up their debt, with some rates as high as 200%.

The report which was published by Save the Children has revealed that as many as 2.3 million borrowers are taking out unsecured loansprovided by door to door credit salesmen. This borrowed money is then used to pay for basic essentials such as food and energy bills.

Provident Personal Credit has been singled out by Jason Strelitz, Save the Children’s poverty advisor, as one of the worst lenders out there. Provident is offering loans of up to £500 at 183.2% APR. Another bad lender singled out is Brighthouse which is specifically targeting deprived areas of the UK with loans that have extortionate interest rates.

The appeal of these loans comes from the fact that high street banks are rarely willing to offer personal loans to high risk borrowers. This has left many poor families with little other choice than borrowing from these lenders.

Doorstep lenders are exploiting these poor families by focusing on the fact that these borrowers have little other choice than going to these lenders for credit.

It is also estimated that around 165,000 of the poorest families in the UK are being forced to borrow month from illegal lenders or loan sharks. The cost of borrowing from these type of lenders can vary but the average paid back on every £100 borrowed is £285.

Save the Children is now calling on the government to give some additional support to the UK’s poorest.