Many of us find it difficult to get a loan from the usual sources and in our desperation may be tempted to ask for a loan from a Loan Shark. These people are pretty unscrupulous and before we know we are in way over our heads. Let’s take a look at the facts surrounding Loan Sharks plus how to deal with one if you feel you are in trouble.
What is a Loan Shark?
A Loan Shark is an unlicensed money lender who charges colossal interest rates to his customers, while using intimidation and sometimes violence in order to get their money back. In all honesty it is best we avoid these people in the first place as they operate with no regulation at all.
Reputable lenders are governed by the FCA or Financial Conduct Authority and follow codes of practice and rules set out by the FCA. Loan Sharks are not registered with the FCA and therefore tend to do as they please when it comes to getting their money back should a borrower be unable to pay.
Customers who opt to borrow money from a Loan Shark will pay extremely high interest rates, the terms of the loan will be way below par, can expect at best to be harassed and intimidated if they don’t pay and ultimately be cajoled into borrowing more money from the Loan Shark if they cannot pay. This extends the loan, means you owe more money, while the borrower finds themselves in a vicious circle of debt.
How to Deal with a Loan Shark if You Cannot Pay
If you find yourself in the unfortunate position of not being able to keep up the payments to a Loan Shark don’t panic. You need help and fast! Call the Citizens Advice Bureau who will help and advise you on what to do. A Loan Shark has no legal right to take money from you and you are not legally bound to pay them back either.
A Loan Shark cannot threaten a borrower with court or prison as non-payment is not a criminal offence, it is the Loan Shark who is committing the offence here. If a Loan Shark threatens or uses violence report them to the police immediately. Remember anyone lending money unregulated is operating illegally therefore should be reported to the Illegal Money Lending Hotline.
The Illegal Money Lending Team
You may think there is nothing you can do when you owe money to a Loan Shark even if they are threatening you but this is not the case. Summoning up the courage to report these people isn’t easy especially when you or your family is being threatened with violence.
Many feel that they are the only ones in this position this is also untrue. It is a fact that over £700 million a year is being paid to illegal Loan Sharks. Many are causing their customers real hardship with reported cases of suicides being the end result of constant intimidation and violence.
In one such case a person went from owing £20.00 to owing £7000.00 as he got caught in the vicious circle of borrowing more and more money to keep his head above water. Finally he plucked up courage enough to contact the Illegal Money Lending Team who helped him through his problem and brought the perpetrators to justice. The IMLT is working tirelessly to bring these criminals to justice and indeed have succeeded in bringing many prosecutions. They can only help if you contact them to report these people. Delaying is not an option as matters will only get worse therefore reporting Loan Sharks is the best course of action.
Better Ways to Borrow
There are alternative ways to borrow even if you have a low credit score or on a low income.
- If you are in work you could perhaps speak to your employer about an advance on wages.
- Short term advances can also be arranged for those awaiting benefits. Speak to the Job Centre advisor who will inform you if this is feasible.
- Many of us can rely on the help of family or friends too. Ask them for a short term loan making sure you discuss how, when and how much you will pay them back.
- If you have a credit card why not ask for the limit to be raised to tide you over but ensure you pay as much back as possible at the end of the month so as not to incur added charges.
- Special credit cards for those with poor credit scores or CCJ’s are available. The interest rates are higher but if you pay back as much as you can each month it will work out much cheaper than borrowing from a Loan Shark.
- If you have a current account ask for an overdraft, don’t go overdrawn without permission
- Find your local Credit Union who will help with debt problems plus arrange loans too
Organisations Who Can Help
Below we list some organisations who offer advice and assistance to those experiencing problems with Loan Sharks