Lincolnshire Credit Union Blog
Community news and information
How to spot nasty loan shark thugs before they take your money
Date added - 16 Feb 2016
The extra spending we do around the start of the year can be costly for some so you could be forgiven for looking for that little bit extra to get you through the next coming months. According to figures published by the Bank of England, borrowing has surged by 8.3% over the year past year, the sharpest rise since February 2006 - two years before the financial crisis hit.
While obtaining a loan can provide a short term solution the dangers of becoming victim to loan sharks is on the rise. More and more loan sharks are looking for their next victim especially at the beginning of the New Year. Loan sharks will start off being friendly and if you keep your repayments up they will stay that way. However, even if you do, the money you borrow will come at a high price.
The interest on these loans can often be incorrect and could even be changed to a higher percentage without you knowing. You pay far more in interest than you would through any legal borrowing. One woman who borrowed £500 ended up repaying up to a massive £88,000! Some loan sharks have even attempted to charge interest rates as high as 719,000%. Failing to meet your repayments could lead you to being harassed by the loan sharks and you could be pressured into borrowing more money to repay one debt with another.
Loan sharks cause misery to people in financial difficulties and everyone around them. Some may be harder to spot than others but always be on the lookout for these signs:
• They will provide little or no paperwork, such as a licence, credit agreement or record of payments
• It’s likely they will increase the debt or add additional amounts to it without your permission
• Many will refuse to give information, such as the interest rate or how much you still owe
• You can expect them to want items for security such as, passports, bank cards or driving licences
• They will not allow you to settle your debt
• In an attempt to get their money from you they will get nasty – they may resort to intimidation, threats or violence
To prevent this happening to you always make sure that the lender you are using 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 or has been refused one, don’t borrow money from them and don’t let them come into your home.• They will provide little or no paperwork, such as a licence, credit agreement or record of payments
• It’s likely they will increase the debt or add additional amounts to it without your permission
• Many will refuse to give information, such as the interest rate or how much you still owe
• You can expect them to want items for security such as, passports, bank cards or driving licences
• They will not allow you to settle your debt
• In an attempt to get their money from you they will get nasty – they may resort to intimidation, threats or violence
With many loan sharks now turning to imitation to get their cash laws have been set up to stop them doing this. Any lender (licensed or unlicensed) who harasses you or threatens you with violence is breaking the law. Some loan sharks will threaten you by saying you will be prosecuted and even sent to prison if you don’t pay up. This can’t happen. An unlicensed lender such as a loan shark has no legal right to recover the debt. They even have no legal right to make you pay the loan back at all – because the loan is illegal.
When you think you have spotted a loan shark you must report them as soon as possible and if you’re in immediate danger should ring the police. To report a loan shark you can contact the Illegal Money Lending Team via their email - reportaloanshark@stoploansharks.gov.uk or phone the 24/7 phone service on 03005 552222.
There are always alternatives to loan sharks and you don’t have to put up with the stress and anxiety they cause. If you’re on a low income or you need to improve your credit rating and you need a small loan for a short time, look into credit unions. They offer low-interest loans and secure savings.
