What is a Loan Shark
Credit can come from a many sources. Banks, Building societies and financial institutions provide credit to individuals. Some retailers provide credit indirectly, choosing to use finance houses. Loan Sharks are unlicensed lenders. They are usually the last resort for someone who is unable to borrow money.
This sounds fine in priciple but in practice when dealing with a loan shark many undesirable things may happen | -
- The interest charged by a loan shark will be extremely high, making it difficult to keep up the repayments.
- A loan shark may force you to get a second loan to pay off the first when you run into diffculties , this could go on indefinantly until your debts are completely out of control
- Loan sharks are notorious for turning violent or just plain nasty when payments are late.
- Some loan sharks have been known take your Social Security Benefit Claim Books as security against one of thier loans.
The Consumer Credit Act 1974 says….
“it is unlawful for a person to carry on a money-lending business unless they are properly licensed by the Office of Fair Trading”. Loan sharks however do not have licences, but are the only alternative, for most people who are refused credit from a conventional source, usually due to poor credit. Loan sharks come in different with different faces some claim to be a reputable business.
One things loan sharks do have in common are extortionate interest rates and charges.
Loan sharks prey on vulnerable people like
- Unemployed
- Lone parents
- Pensioners
- People with learning difficulties
- Drug addicts
- Gambling addicts
- Immigrants
- Single mothers/parents
- People with bad credit
What to do If you know of a loan shark who is operating in your area.
Tell your Local Trading Standards Service
If you are being threatened or harassed by a loan shark try..
- Citizens Advice Bureau (CAB)
- Local Police
- Trading Standards Service.