According to a study published by the Centre for Social Justice, there are 1.08 million individuals in the UK who may be borrowing from an illegal money lender, also known as loan sharks. Since 2010, this figure has almost quadrupled.
Unlicensed lenders are springing up to assist the desperate with short terms loans at exorbitant interest rates, as cost increases on everything from fuel to food make it increasingly difficult for low income families to make ends meet which opens up many risks. Many people think it will just be one loan but it often snowballs into further trouble.
Loan sharks are predators that take advantage of society’s most vulnerable people who cannot save money. They offer false promises of fast and easy money for people with a poor credit rating then once their victims are stuck in a cycle of debt, they demand outrageous repayment rates to which you owe money to them.
But what are loan sharks?
Loan sharks are an illegal lender who lends money without the required permission from the Financial Conduct Authority (FCA) and without much personal or financial information on hand to borrow money.
It is against the law to lend funds without a licence. However, if you loan money from a shark it is not a criminal offence.
It is illegal to lend money in this way and often goes unreported, but it instils a great deal of fear in those who suffer from it. Borrowers become trapped in a never-ending cycle of extortion, constantly facing intimidation, violence and financial ruin from this illegal lending.
People often see loan sharks as a last resort for borrowing, especially for those with bad credit scores who mainstream lenders have rejected. As they dont check financial information it seems like a miracle. Illegal lenders can trap people quickly if they have one unexpected bill to pay.
Not only do loan sharks lend out large sums of money and charge extortionate rates of interest, but the real danger is the psychological damage it does to victims and their families. It leaves them feeling trapped and helpless, with no way out.
How can you spot loan sharks and what are the warning signs?
A loan shark is somebody who loans money and charges very high rates, often to people who are in a difficult financial situation. They might be someone you know, or they could just be someone local that people have heard of.
These sorts of lenders will almost always operate solely in cash, which makes it difficult to keep track of payments or repayment rates. Not only that, but these types of loans often come with extremely high interest rates.
Loan sharks can be extremely harmful, and they have been known to employ coercion and violence against those who do not meet their obligations.
Cyber loan sharks are becoming more frequent, luring their prey in through social media and other online platforms. These internet lenders utilise deceptive advertisements, false promises of quick money, and intimidation to entrap innocent individuals into debt using fear as a lever to pull them in and exploit their weaknesses.
You could be taking out a loan from an illegal money lender if you can answer yes to one or more of these questions:
- Did they offer you a cash loan or bank transfer?
- Did they not give you paperwork?
- Did they add huge amounts of interest or APR to your loan?
- Have they threatened you?
- Are you scared of people finding out?
- Have they taken your bank card, benefit card, passport, watch or other valuables from you?
Think carefully before hiring a loan shark. They frequently present themselves as being on your side, but this is a trap.
Is your lender legal?
If someone is lending you money, they must be registered with the Financial Conduct Authority (FCA). The Financial Services Register lists firms and individuals that have the authorisation to offer loans and credit. Before borrowing money, do your homework and borrow from a licensed lender.
How to get help
If you have borrowed money from a loan shark or are concerned about a family member, you may get expert assistance and support from the England Illegal Money Lending Team. The team was formed to stop loan sharks and assist victims of unlawful lending as well as their friends and relatives.
Multiple debts?
Do you have debt that you’re having trouble managing? If that’s the case, remember that you aren’t the only one and there is no such thing as too late to seek debt advice. We are a competent and expert company that can assist you in restoring your finances.
We are available for contact on 0800 169 1536. You can also use the confidential live chat service on our website to speak to a debt advisor (available 9am to 6pm, Monday to Friday).
