Festive Warning from North East Charity
01 December 2009
Financial experts from Northumberland-based social enterprise DAWN Advice are warning against the dangers of sacrificing their festive feelings to unscrupulous loan sharks this Christmas.
DAWN Advice, based in Seaton Burn, says the pressure of buying expensive presents for the whole family during the recession could see more people than ever before resorting to unlicensed moneylenders - and the exorbitant repayment rates they demand.
Recent figures have shown that annually around 15,000 people borrow money from loan sharks, a large proportion of those who do so in the run up to Christmas. Often rogue moneylenders charge extortionate rates of interest, making it impossible for borrowers to pay back the money - these rates can be as high as 200 per cent, but on occasion annual percentage rates have been seen to soar as high as 149,000 per cent.
Liz Chadwick, Chief Executive of DAWN Advice, says when borrowers can no longer afford the steep repayments, lenders often turn to tactics of intimidation and violence, potentially turning what is meant to be a season of festive cheer into one of misery and apprehension.
She added: "December can often be a stressful time for families as we all feel under pressure to have the perfect Christmas day with great presents and food. It is important to remember however that it is really a time for family and that you don't need a lot of money to have a wonderful holiday.
"I would encourage people to work out what they can safely afford to spend this Christmas, and stick to this budget rather than looking to borrow money from unscrupulous sources. No gift is worth risking the threats of a loan shark for, and those that do often find they are trapped in an impossible cycle of increasing repayments they are unable to afford.
"At DAWN we offer support to people who are suffering from debt and our finance professionals can offer advice on the best way to prepare and budget for the festive season. At this time of year especially, we want to reassure people suffering financially that they are not alone."
DAWN Advice offers free, confidential and independent advice to people across the region and nationally on issues relating to housing, debt, employment, welfare benefits and family law.
Established in 1998, DAWN Advice is a social enterprise and a member of the UK's largest network of free, advice-providing organisations, adviceuk and will now become a Member of the National Association of Citizen's Advice Bureau.