In times when finances are pushed and the cost of living is hurting, there are always criminals who will try to take advantage of people, loan sharks are people or unregistered organisations that lend or loan people money illegally, with high-interest rates, and operate outside the laws & regulations of financial institutions. You should never lend money from a loan shark because you are not protected by law, loans are not affordable and you risk your and your family’s safety.
The UK government and other agencies estimate that 165,000 to 200,000 people are in debt to loan sharks.
The Traditional image of a loan shark is a seedy gangster-type chap however, it can be anyone, a friend, a neighbor, a professional-looking business, or even a dodgy Facebook AD that links to a presentable-looking website. In this article, we address the signs you may be borrowing from a loan shark and what to do if you already are.
High-Interest Rates
Loan sharks tend to charge higher than normal interest rates, UK lenders if regulated will tell you your annual interest rates which are advertised as an APR. Loan sharks will give daily or weekly rates, which can range from 5% a day to 20% a week, within a short period you can owe hundreds of times more than you originally lent.
No affordability check
UK lenders are required to make sure you can afford a loan, An affordability check involves seeing if you can afford to repay a loan when you borrow an amount. A lender will ask you to honestly advise them of your income, household income, and expenditure to make sure you can afford a loan based on your circumstances.
If this doesn’t happen either online or in person you could be dealing with a Loan shark.
Credit checks
UK-regulated leaders will check your credit report with one of the UK credit agencies, this is to ensure you can afford a loan and that you have been honest in your application. A loan shark will not be able to perform a credit check, they may pretend to but you can check your credit reports for searches on you to verify that the loaner has.
Cash loans or personal bank transfers
A regulated lender will never hand you the cash or transfer your loan money from a personal bank account, this method of lending is risky to all parties and is very common in the underground of lending money, if someone is offering you cash as a loan this is dead giveaway they are lending illegally.
Suspicious Facebook and Social Media Adverts
Loan sharks traditionally operate locally, however, there are waves of fake Facebook specifically targeted at people who are struggling facebook collects data that allows people to advertise fake loans to you, they know you are struggling because of your posts, search history, and group memberships, if it doesn’t look real or looks too good to be true this could be a sign its a fake.
No Paperwork
If you’ve got no paperwork and the lender offers you none whether that’s digital or face-to-face, this is not legal and you are risking being conned. Never accept a loan without any paperwork or emails, if this is the case and this is what you are being offered you could be dealing with a loan shark.
Threats of Violence
Threats to you, your family, and your friends are completely unacceptable, if you are at immediate risk seek advice immediately, whether this is before, during, or after a loan. A lender will not threaten you this is the key tactic of loan sharks to ensure they get a return on their illegal loan.
Not Finance Conduct Authority Registered
If you have borrowed money from someone who isn’t FCA authorised you could be dealing with a loan shark, you can legally borrow money from friends and family but if it is anyone else they must be FCA registered you can find out whether a lender is authorised by checking the register on the FCA website at www.fca.org.uk. If they are not they are breaking the law not you.
What if I’m in debt and I am considering borrowing from a loan shark?
Don’t, speak to citizen’s advice to search for details of your nearest CAB, including those that advise by email, click the link nearest CAB to find your nearest office. You put yourself at risk if you borrow from a loan shark there are other solutions and help you can receive, being in debt is not the end of the world.
What should I do if I have borrowed from a loan shark?
In England
You can speak in confidence to the Illegal Money Lending Hotline on 0300 555 2222.
You can also email the Illegal Money Lending Team at reportaloanshark@stoploansharks.gov.uk
Text loan shark and your message to 60003.
In Scotland
You can speak in confidence to the National Trading Standards Scotland team to report an illegal money lender by calling 0800 074 0878,
Report it online to them at www.tsscot.co.uk.
In Wales
You can report your concerns about a money lender to the Wales Illegal Money Lending Unit which operates a 24-hour confidential helpline by calling 0300 123 33 11.
In Northern Ireland
You can contact the Trading Standards Consumerline by telephone 0300 123 6262.
If you are at an immediate risk of violence call the police on 999
Never be ashamed if you’ve been conned, never deal with a loan shark. – Money Lad
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