Most people are now well aware that getting loans and credit in the current financial climate where credit conditions are very tight has become extremely difficult. Many of those that may have bee eligible for affordable credit last year may not find that they are unable to get low cost credit, and those on low incomes or with damaged credit may not be able to get any finance at all from mainstream lenders in the current financial conditions. A recent report has warned that many of these people may be targeted by doorstep lenders, who prey on those unable to get credit anywhere else and charge them extortionate amounts of interest.

An official from one major doorstep lenders in the UK, Provident Financial, recently said that the firm was expecting strong growth over the course of this year following a strong start to the year in terms of business. One of the reasons behind this growth is that higher living costs and increasing bills has left many lower income households unable to manage financially without taking some form of credit, and as many lined of credit have been made inaccessible to those with bad credit or on low income many think that their only alternative is a doorstep lender.

One official from the Housing Corporation recently warned consumers: ‘‘if you borrow from doorstep lenders, you risk the roof over your heads in return for a day’s happiness.” Another industry official said: “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.”

Some officials have suggested that many of the people that go through doorstep lenders could actually benefit from going through a local credit union instead, with one official stating: “Credit unions offer a great alternative to money shops and payday personal loans for people needing small loans over relatively short periods. Credit unions charge no more than two per cent on the reducing balance of a loan and many charge just one per cent, which would mean that £1,000 taken out for a month and paid back weekly would accrue just £5.76 in interest at one per cent.”