The best advice when dealing with loan sharks is to ‘do not.’ They are unlicensed lenders offering very high-interest rates and may resort to threats or violence to scare people who cannot repay their loans.
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- Loan sharks
- If you have borrowed money from the loan shark
- If you are being harassed
- Other methods of borrowing money
- Assistance and guidance
Credit sharks
The term “loan shark” refers to a non-licensed money lender that often targets families with poor incomes or those facing difficult circumstances.
Licensed money lenders are regulated through the Financial Conduct Authority (FCA) and must adhere to the FCA’s codes and guidelines of practice.
The loan sharks they offer loans to are not licensed and operate in violation of the law. If you take a loan from them, you may:
- Get a loan with inferior terms
- Pay a high rate of interest
- You could be snubbed if you need to catch up on your repayments.
- Be compelled to borrow more from them to repay one loan by repaying another.
If you have gotten a loan from the loan shark
If you have borrowed money from a loan broker, you are not under any legal obligation to repay the loan. A loan shark must be certified or licensed by the FCA to have the legal authority to collect the loan.
Some loan sharks scare individuals by claiming that they will be charged and sentenced to prison if they fail to pay. This is not the case – making a repayment on a loan made by an unlicensed lender is not criminal.
It would help if you contacted the neighborhood Trading Standards Office immediately. It can help you deal with the issue and also the lender.
- Find the Financial Service Register(external link opens in a new window or tab)
If you are being harassed
Any lender, whether licensed or not, who attempts to contact you for a reason is breaking the law.
You must notify any loan sharks to the local office of the Trading Standards Bureau and the police if a loan shark threatens or engages in violence.
Other methods of borrowing money
If you need money, you should always ensure you are working with an authorized lender. Some trustworthy lenders will be willing to lend you money regardless of your income, poor credit score, or if you need money for a short time.
You may have to pay substantial interest, but you can rest assured that the Consumer Credit Act will cover the loan contract. Be sure to shop around for credit, however – even if a lender is licensed does not guarantee you the best bargain.
If you are living on a limited income and need to borrow a little to cover a short period, consider the possibility of borrowing at a local credit union. Credit unions will encourage you to save as much as possible and only lend amounts you can repay.
The maximum amount you have to pay for interest would be 1 cent per month. So, the interest for the PS100 loan will be at most PS1 per month.
- Credit and borrowing
Advice and assistance
Always seek out free, non-biased assistance before paying for an expensive service. Many organizations provide this assistance with money, which includes:
- Step change Debt Charity
- Advice NI
