Figures from the England Illegal Money Lending Team, an organisation that works in partnership with trading standards authorities to investigate and prosecute illegal lenders and support victims, show that in the first half of 2023, 56% of the people it worked with said they thought they were borrowing from a friend.
But there are warning signs to look out for, and alternatives available for those who need access to affordable credit but who might have been turned down by the mainstream banks.
What is a loan shark?
A loan shark is another term for an illegal money lender – someone who lends money and asks for repayments, but who does not have the necessary authorisation from the Financial Conduct Authority (FCA).
Why do people turn to loan sharks?
Often someone may be looking for a small amount over a short period to cover unexpected expenses. They may have been refused credit elsewhere and need cash at short notice. In the cost of living crisis, more people are being forced to borrow to cover basic living costs such as bills and food.
What are the warning signs that someone is a loan shark?
There are a number of giveaways that indicate the person you are borrowing from is not a legitimate lender.
They can include:
- You are given no paperwork or details about the loan
- The lender demands repayments that add up to much more than you initially borrowed
- They intimidate or threaten you if you struggle to pay
- They demand you hand over items like bank cards or a passport until you can pay
Where can I go to borrow money if I have been turned down by the banks?
Credit unions offer an alternative, ethical and safe way of borrowing for people who may have been refused credit elsewhere. They can offer small loans at affordable rates. Visit www.findyourcreditunion.co.uk to find one nearest to you.
What should I do if I think I have been targeted by a loan shark?
Contact the England Illegal Money Lending Team. There is a host of information on its website www.stoploansharks.co.uk.
You can:
- Call the 24/7 confidential hotline 0300 555 2222
- Text a report to 078600 22116
- Join a live chat on the website www.stoploansharks.co.uk
- E-mail reportaloanshark@stoploansharks.gov.uk
- Private message on www.facebook.com/stoploansharksproject
Remember you have done nothing wrong if you have borrowed from a loan shark. It is the lender who has committed a crime.