New rules on credit card debt: what do they mean for me?
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You should never borrow from a loan shark. If you're really worried about your finances, there are better ways to tackle your problems.
You might have heard about loan sharks in the papers or on the news. You might have heard lenders who charge high interest rates called 'legal loan sharks'.
So what is real loan shark - and what makes them different from other lenders?
No licence, no rules - no right to lend
First of all, they're unlicensed lenders. They don't have a Consumer Credit Licence from the Office of Fair Trading (OFT) - and it's illegal to lend money without one.
So they're criminals by definition, as they operate outside the law.
Genuine (licensed) lenders have to stick to all kinds of rules about how they treat their customers. If they don't, they could lose their Licence. That would mean they'd have to stop trading - so you can imagine how seriously they take it.
Loan sharks are also known for charging extortionate interest rates, not issuing any paperwork and taking borrowers' valuables (credit cards, driving licences, passports, etc.) as 'security'.
Even worse, they're known for using violence and intimidation to make people pay back what they've borrowed - and a lot more besides.
Why do people turn to loan sharks?
People might turn to loan sharks because they're desperate, because they can't get a loan anywhere else - or because they just don't know the difference between a licensed lender and a loan shark.
What should I do if I'm in debt to a loan shark?
You can report them anonymously - visit GOV.UK to find out how (you'll also find a link to the Consumer Credit Register, so you can check whether someone has a licence before you borrow from them).
What if I'm thinking of borrowing from one?
If you're thinking of borrowing from a loan shark: don't!
You'd be much better off going to a licensed lender - if you really do need to borrow money, that is.
But if you're really struggling with your finances, borrowing more money probably isn't the answer anyway.
A budget planner might help you get your finances back under control. It'll show you how to track the money that's coming into your household - and where it's going. This can help you figure out where you can cut back to make sure you can afford all your essential costs.
If you don't think that'll be enough and you might need some practical help with your debts, you can talk to one of our debt experts on 0161 605 4810 - or fill in our debt solution finder and find out how we might be able to help you.
by Christine WalshBack to blog home