According to the county's Citizens Advice branch, residents - and in particular those on low incomes who will find their spending squeezed as the festive season approaches - are being invited to apply for a personal loan for Christmas in a leaflet received through the post, the Coventry Telegraph reports. However, David Gooding, manager of the Bedworth, Nuneaton and Rugby branches of Citizens Advice, is warning people to not take out such a loan as they offer interest rates of up to 183 per cent, a figure which could ultimately place such people under more monetary hardship. As a result the industry expert indicated that consumers taking out 500 pounds could be forced to make repayments of 1,415 pounds - nearly treble the original amount lent out.

As a further example, Mr Gooding pointed out that consumers taking out a 300 pounds loan with the company will ultimately end up repaying a total of 504 Pounds. He claimed: "This is like going out to buy your Christmas presents and, however hard you try to hunt out the bargains, ending up paying almost double the shop price with a loan."

Mr Gooding claimed that by offering loans of between 50 pounds and 500 pounds, the credit company is purposely targeting people on low incomes and consumers who have struggled with their spending in the past. He told the publication: "The loan offer is specifically aiming to attract those on low income including the unemployed, people with County Court Judgments and those renting their home offering 'no hidden charge or hassle' but seem to have been sent as a general mail-shot."

Consequently, he advised Warwickshire residents to avoid taking out a borrowing product with the loan shark in the build-up to Christmas as doing so could lead them to develop even further debt difficulties in 2008. "We are very concerned that those on a limited income will be tempted and fall into debt providing for Christmas and this will cause serious financial problems in the new year," Mr Gooding added.

However, for those people who remain concerned that their finances will not be able to cope with extra spending over the Christmas and new year period, taking out a personal loan with a reputable financial provider could be a shrewd move. Earlier this year, the government announced the roll-out of a scheme which will see specialist teams target unscrupulous lenders and giving Britons, including those on low incomes, greater financial guidance. According to John Hutton, secretary of state for business, enterprise & regulatory reform, more than 165,000 households throughout the country experiencing financial difficulties are being targeted by unscrupulous loan sharks who charge "astronomical" rates of interest on their borrowing products.

In addition, consumers will be given advice on how to choose cheap loans and other competitive borrowing options. As a result, such moves may see people be more able to meet demands for payment on personal loans, utility bills and mortgages. Cities to receive this guidance include Manchester, Nottingham, Cardiff and Peterborough. The announcement follows two successful trials which took place in Birmingham and Glasgow.