In tough economic times, many families are finding life is getting tougher as hungry loans sharks start to circle. Reports suggests that wage earners spend around 10% of their wages repaying so-called wasteful debt – high interest loans to greedy finance company and last resort lenders.
A survey released by the Unite union looked at how Government cutbacks have affected nearly a third of its 1.5 million members. Over 75% of members reported that they couldn’t make it through the month without resorting to lending from payday finance companies simply to pay outstanding bills or catch up on rent payments.
Although loans are readily available to people in work, interest rates are excessive and can be as high as 4,000% on an annual basis. The loan companies justify their high rates by saying that its loan book is predominantly high risk.
Unite’s spokesman Len McCluskey says the survey empathizes the union’s view that Government policies have undermined the lives of working people and created a culture of high-interest loans from companies like Quick Quid, The Money Shop and Wonga. Since the cutbacks, workers have reported they have £150 less per month to live on.
The Minister of Welfare Reform, Len Freud suggested the Government was doing what it could to help low-income families. Mr. Freud cites the recent £38 million programme to help credit unions facilitate low-interest loans as a measure to counter the greed of high interest loan sharks.