Knowing how to avoid and recognise when you are coming in contact with a loan shark is crucial if you want to keep you and your financial health safe. You need to be able to know what an illegal lender and the implications is of getting involved with type lender where you would borrow money from.
What is a loan shark?
An illegal lender who offers loans at very high-interest rates who works outside any law enforcement and local authority.
For all those of you who need to borrow money quickly think about who you are borrowing from and what are the rules which apply to pay the loan back are they ethical? Loans sharks often target low-income families and vulnerable individuals within the community. They do this as they know these kinds of people might need to borrow money and take advantage of your vulnerability. Loan sharks are not regulated by the Financial Conduct Authority (FCA) and can be hard to trace as they work under unknown identities. Some may not give you any information or paperwork needed so that you can track their actions which prevent you from being able to report them to the authorities. This is why if you are in a similar situation, it’s essential you report the loan shark to the right authorities to investigate.
How to recognise a loan shark?
Spotting a loan shark can be difficult at times, especially if you don’t know what the signs or things are you should be looking for specifically.
- Usually, the loan shark will not present you with any paperwork or evidence of your agreement
- The loan shark may be reluctant to give up any information regarding the high-interest rates which come with the loans being offered
- Loan sharks will hardly ever advertise their services to the general public
- The loan shark might take some belongs to fix against the debt as security that you will pay the loan back, e.g. personal property or cars
- The loan shark will try their best to make sure you never really pay off your debt so they might ask you to pay extra costs later down the line which were never said previously
- The loan shark may portray aggressive behaviour towards you and even threaten you
Tips on how to protect yourself or if you are a victim:
- Saving regularly can help you out in a time of great need which will prevent you from needing to take out a loan
- Avoid taking out any form of cash loan as the interest usually incurred based on many different factors depending on the terms of the loan being offered
- Check the lender who is offering the loan to you is a legal lender covered by the FCA financial service register
- If you a short of cash the best places to borrow from are credit unions which are a creditable and more ethical way to borrow money without the high-interest rates attached
- if you are a person who has been a victim of a loan shark, you can report your situation to Trading Standards or contact the Citizens Advice consumer service. For more information about who you should get in contact with or how to report a loan shark click here.