Loan sharks are illegal lenders who will charge a high rate of interest. They usually have no paperwork, and might resort to threats or violence to recover the debt.
We've included some useful tips from the government to help you avoid getting into financial difficulty with a loan shark.
Tip 1 - Only borrow from legal lenders
Ask for proof the lender has a Consumer Credit Licence.
Tip 2 - People lending without a licence are illegal
You are not breaking the law if you borrow from someone without a licence but you are likely to be ripped off and maybe worse.
Tip 3 - Illegal lenders are loan sharks
You may have been bitten by a loan shark if your loan keeps growing even though you pay regularly. One loan shark customer had to pay £50 a week out of her benefits of £74 per week. Another was charged 117,000% interest (APR).
Tip 4 - Some loan sharks threaten you when you can’t repay
These kinds of loans are unenforceable without a court order.
Tip 5 - Most loan sharks don’t provide paperwork
You never know how much you have paid.
Tip 6 - Report your lender if you don’t think they have a licence
Phone our confidential help line 0300 555 2222. It is staffed 24 hours a day 7 days a week, 365 days a year. You can also email firstname.lastname@example.org.
You will not get into trouble with the authorities. Remember, it is the loan shark who is behaving illegally.
Tip 7 - You probably won’t have to repay loans from an illegal lender
Contact the helpline for guidance. Where loan sharks are caught and prosecuted, loans outstanding to the loan shark are written off and any victims who require it are offered support by the team.
For further information:
- Visit the Report a loan shark website