Low income families 'forced' into high interest loans
Published On 11 December 2007
Families trying to survive on low incomes are often forced to take out loans with high rates of interest to make ends meet, according to a new study.Research carried out by Save the Children found that parents struggling to manage living costs are particularly vulnerable to door-to-door sellers offering loans at uncompetitive prices.
"Doorstep lenders exploit poor families' inability to get credit from more mainstream lenders and they cover their risk in lending to the less well off by charging punitive interest rates," warned the report's author, Jason Strelitz.
He added, however, that it is the debt that must be tackled to eradicate the problem as doorstep lenders are just a 'symptom' of the wider issue.
"This is about tackling symptoms, not causes," he said. "The government is off track in meeting its own target of halving child poverty by 2010."
The charity has asked the government to commit £4 billion to supporting low-income families, as well as offering seasonal grants to help poor parents through periods of financial strain.
Children's secretary Ed Balls pledged recently to eradicate child poverty by 2020 as he unveiled his new Children's Plan.
