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Tackling your debts

What are loan sharks?

Posted 07 August 2013 by Sarah Symons

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Find out what makes loan sharks different to other lenders - and what you can do if you're thinking of borrowing from one.

Sometimes, the only way to make it through the month is to borrow a bit. As long as you pay it back on time, this doesn't have to be a big problem - any legal lender will be able to tell you how much it'll cost, how much interest you'll pay, what could happen if you don't repay, etc.

It might not be easy, but you'll know what you're signing up to.

So what makes loan sharks different?


Loan sharks are not like other lenders. First of all, they don't have a Consumer Credit Licence - and it's illegal to lend without one.

So they're criminals by definition.

What difference does that make?


It makes a huge difference. Legal lenders can't just change their interest rates, or hit you with charges they've made up on the spot. They can't threaten you with physical violence, or go after other members of your family who have nothing to do with the debt.

Borrow from a loan shark and they might do any of those things. They don't have any guidelines or rulebooks to stick to, so their only concern is getting people to pay up.

How do I deal with a loan shark?


You can report them on stoploansharks.org.uk.

People are often nervous about reporting criminal activity, but the site makes it very clear that:
  • Borrowing from a loan shark isn't a crime (it's lending without a licence that's illegal).
  • You don't have to give your name or contact details when you report a loan shark - you can do it anonymously.

What if I really need the money?


If you really need to borrow some money, you'll need to find a legal lender: borrowing from a loan shark is only going to make things worse.

But if you're really struggling, even a payday loan / credit card / overdraft might be a bad idea. There might be a better way of dealing with your money worries that doesn't involve borrowing any more money.
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You can call us on 0141 305 3020 if you'd like to talk to a debt specialist, or you can fill in the form on this page and we'll get back to you.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.