Loan shark warning issued

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Loan shark warning issued

People struggling financially have been warned against payday lenders and loan sharks.

Writing in Scottish newspaper the Daily Record, Alex Morgan told readers that despite tightened lending criteria in the credit crunch, low-cost alternatives do exist.

While payday lenders offer instant money without credit checks, the paper warned of the "massive catch" of huge rates of up to 2,000 per cent.

This can force people to borrow more if they can't repay the cash and the interest.

Andrew Hagger of Moneynet.co.uk also warned against log-book loans which can use a car as collateral and typically charge rates of over 400 per cent.

And readers were told to avoid credit card cheques and cash advances, which charge high interest and other fees.

Credit unions, instead, were suggested as a means of being considered for a low-interest loan and to help saving.

The Derry Journal has reported a call by Derry Credit Union for people not to turn to loan sharks as Christmas approaches.

Spokesperson Seamus McAnee said that while paying back just £5 a week sounds attractive, the length of time it takes and the amount of interest could be extreme.

He added that loan companies could become aggressive about repayments.

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