7:27am Friday 12th March 2010
By Michael Purton
A MUM who spiralled into debt after borrowing money from loan sharks is urging people not to make the same mistake.
In 2008 Deborah Smart, 42, borrowed £150 to buy Christmas presents for her five-year-old son but her debt has now reached £1,500.
She borrowed the money because banks would not give her a loan as she had been declared bankrupt after losing her job due to mental health problems.
Miss Smart, of Hampton Crescent in Gravesend, said: “It was coming up to Christmas two years ago and I was short of money for Christmas presents.
“It was impossible to get a loan or overdraft from a bank.
“A leaflet came through my door from a company offering easy loans and I borrowed £150 from them.
“I always met the scheduled payments, but because I couldn't get money from elsewhere I had to borrow again for my son's birthday.
“From there the borrowing just snowballed.
“I was using the money and then having to borrow again because my benefits were being spent on meeting the loan payments.
“For every £100 I borrowed I was paying back an extra £50.
“It got so bad I had to borrow £250 from another loan company around a year ago.”
The two companies Miss Smart borrowed from charged almost 300 per cent APR.
Desperate to get out of the cycle of borrowing, she approached Gravesend-based credit union Kent Savers for a loan and financial advice.
Backed by Kent County Council, the non-profit making co-operative offers low interest loans with a typical APR of 26.8 per cent and financial advice.
Miss Smart believes that with Kent Savers' help she can finally free herself of her debt.
She said: “Knowing what I know now about Kent Savers, I would advise people to go to them instead of a loan company which will exploit you to make a profit.”
A Kent Savers spokesman said: "Our approach is to encourage customers to save at the same time as they repay the much lower interest rate loans we offer.
"So they use some of the money they save with us on their loan repayment to build a nest egg. This allows them a cushion of finance and enables them to break the habitual return to borrowing to pay for items and special occasions."
© Copyright 2001-2012 Newsquest Media Group
http://www.newsshopper.co.uk/trade_directory/