Don't Get Bitten By Loan Sharks!
Recently we have received reports that some of our residents’ have been approached by loan sharks.
Loan sharks are illegal lenders who often target people in desperate circumstances. They may seem friendly at first but borrowing from them is never a good idea - they often resort to intimidation, threats or violence. And they often won’t give you much paperwork to confirm the arrangements they have made with you.
They’re also likely to charge extremely high rates of interest. According to a recent article from the BBC, some loan sharks have attempted to charge interest rates as high as 719,000%*! According to The Money Advice website, one woman borrowed £500 and found she had to pay back £88,000!!
Although some loan sharks resort to intimidation and violence, they are not beyond the law. An unlicensed lender such as a loan shark has no legal right to recover the debt.
How to spot a loan shark
A loan shark may:
- Offer little or no paperwork, such as a licence, credit agreement or record of payments
- Increase the debt or add additional amounts to it without your permission
- Refuse to give information, such as the interest rate or how much you still owe
- Take items as security, such as passports, bank cards or driving licences
- Not allow you to settle your debt
- Get nasty – they may resort to intimidation, threats or violence
How to check a lender is legitimate
The Financial Conduct Authority (FCA) keeps details of all licensed lenders, as well as everyone who has applied for a licence or has had one taken away or suspended. If a lender isn’t listed as having a current licence, don’t borrow money from them and don’t let them come into your home.
Check the FCA register to see if a lender is licensed
Alternatives to loan sharks
If your income is low, you have a poor credit rating or you only need a small amount for a short while, there are still reputable lenders you can turn to instead of loan sharks.
Credit unions
If you’re on a low income or you need to improve your credit rating and you need to borrow a small amount for a short time, look into borrowing from a credit union. You will generally have to join first and some credit unions may ask you to save a small amount before you can borrow.
Dealing with debt
If you’re thinking about using a loan shark because you can’t borrow money anywhere else, then Muir’s Money Advice Team can help.
If you have been approached by a loan shark, or know of any that are operating in your community, then please let us now. You can speak in confidence a member of the Muir team on 0300 123 1222.
*The Money Advice Service: Source BBC News Story