Thousands of families are facing crippling debt problems after taking out doorstep loans from loan sharks in order to pay for Christmas.

A new report revealed that around 100,000 of the UK’s poorest families have taken out loans with an average APR of 825% during "the worst Christmas in a generation" for borrowing from doorstep lenders.

The Real Cost of Christmas report, commissioned by affordable housing provider Circle Anglia, found that an estimated combined debt of £82 million will be repaid this year by families who took the loans to pay for Christmas.

According to the report the amount borrowed comes to approximately £29m, but with extremely high interest rates
The value of the loans is an estimated £29m, but average interest rates of 825% means that people will end up repaying almost triple the initial amount they borrowed.

The report found that people borrowed an average amount of £300 with a repayment period of a year.

The chief executive of operations at Circle Anglia, Andy Doyland, said:

"We hope that by turning the spotlight on loan shark activity we can help more people to seek help and get sound financial advice."

Illegal loan shark activity has been increasing according to the report and it found a 22 percent increase in the number of people who are turning to loan sharks for help. The Christmas period is the when the majority of these loans are taken out.

The credit crunch is being blamed for forcing people to turn to illegal lenders after sources of mainstream credit became restricted.