Be warned: loan sharks are not just a thing of gritty crime fiction. They’re real, they’re dangerous, and they’re closer to you and people you care about than you may think. If you’ve found yourself dealing with a loan shark, you’re not alone and there is help available.
If you’re struggling with debt and can’t get affordable credit from a mainstream lender, it can feel like your options are limited. It’s at this point where some people may feel tempted to borrow from illegal lenders, known as a ‘loan sharks’.
Of course, loan sharks rarely address themselves by that term. They instead like to present themselves as a friendly face in the community, often recommended to you by a friend, neighbour or family member. By contacting you via someone you trust, their hope is that you’ll be easier to exploit.
- What is a loan shark?
- It’s never a good idea to borrow from a loan shark
- How can I tell if if I’m dealing with a loan shark?
- The facts about loan sharks
- What you should do next
- Are you struggling financially?
A loan shark is an illegal money lender operating without authorisation from the Financial Conduct Authority. By lending money without this they’re breaking the law and can face prosecution. They evade prosecution by using bullying tactics in order to keep their victims from reporting them to the authorities. What’s more, the high interest they tend to charge to get their money back can be devastating.
Loan sharks often operate by targeting people who are struggling financially:
- single parents
- unemployed people
- financially vulnerable families
- people with poor credit ratings
They can also sometimes target people who feel ‘cut off’ from the community, such as people from ‘outside of town’ with little to no family or friends living close by. It’s not difficult to see the predatory nature behind their tactics, and that the name ‘loan shark’ is very much earned.
If you’re struggling financially loan sharks can often make your situation worse. They’re often highly manipulative and know exactly what to say. They do this to gain your trust and get you to take their money. At first they will appear sympathetic and kind, so it’s easy to think that they are your friend.
Unfortunately, once you agree to take their money their behaviour towards you is likely to change.
If you’re worried that you or a friend or family member are dealing with a loan shark, there are a few tell-tale signs to look out for:
- They refuse to provide you with proper paperwork about your loan – you’re never really sure what you owe
- They refuse to give you information, such as the time left on the loan, or what you’ve repaid so far
- They keep adding unfair amounts of interest to the amount you owe so it never goes down
- If you struggle to pay they’ll use scare tactics such as physical threats to pressure you into paying them
- They may take your things if you don’t pay what they want on time
- They may withhold your possessions until a debt is paid
If you think you have been targeted by a loan shark try not to panic, and remember these facts:
- You’re NOT breaking the law – the loan shark is breaking the law, not the borrower
- They have no legal right to pursue you – because the loan is illegal, the loan is not entitled by law to get money back from you
- They’re NOT your friend – they may try to make you feel like they are at first, and then when they change it can be confusing and upsetting. Remember: loan sharks often target vulnerable people they can take advantage of.
- It’s NOT your fault – loan sharks are usually experienced criminals who know how to manipulate people, especially when they’re those who are vulnerable
You can check if someone is an authorised money lender by searching for their name and trading address on the Interim Permissions Consumer Credit Register. It’ll tell you if they are allowed to operate legally.
If they’re not registered you should contact the Illegal Money Lending Team. They can offer you confidential advice. The team is run by the police and Trading Standards and will take steps to prosecute anyone lending money illegally. Their contact numbers:
Wales Illegal Money Lending Team – 0300 123 3311
Scotland Illegal Money Lending Team – 0141 2876 655
Northern Ireland Trading Standards Consumer Line – 0300 123 6262
If you fear for your safety at home, try to get yourself to a temporary safe space, such as a friend’s house. Shelter may be able to help you with emergency accommodation.
You’re not alone, and there’s no need to feel guilty or embarrassed that you’ve fallen victim to the bite of a loan shark.
For free online debt advice use the MoneyAware online Debt Remedy tool anonymously now.
This article has been written by Becca Drury at the debt charity StepChange.org.