Loan sharks

Many households are financially squeezed due to the increase in the cost of living, from the increase in National insurance contribution, rent, council tax, grocery shopping, utility bills, and travel costs.

The financial pressures may lead to some households resorting to borrowing from loan sharks.  Loan sharks often target people who need to borrow money quickly and/or are unable to obtain a loan from legal sources.

A loan shark is a person that offers loans at extremely high-interest rates. Loan sharks can be anyone, for example, a friend, family member, next-door neighbour, or someone who is considered the pillar of the community.

Loan sharks also operate on online platforms such as Facebook, Craiglist, Reddit and Snapchat.

Borrowing from loan sharks comes with many risks not only the extremely high-interest rates.  Many also face harassment and threats if the borrower falls behind with repayments. The borrower might be pressured into borrowing more money to repay one loan with another and end up in a spiral of debt that can never be repaid.

Signs of a loan shark

• No paperwork
• Loan sharks normally prefer cash transactions, however, more are using bank transfers.
• Lack of information about interest charged,  a repayment plan, and the total amount owed.
• Taking possessions for security- such as passports.
• The loan is growing instead of reducing despite payments being made.
• Threats of violence, intimidation, and/or harassment.

All legitimate lenders are registered with the Financial Conduct Authority, please refer here

Any lender – authorised or not – who resorts to intimidation/ harassment is breaking the law.

Some loan sharks will threaten borrowers that they may be prosecuted and even sent to prison if they don’t pay up.  However, an unauthorised lender such as a loan shark doesn’t have the legal right to make the borrower pay the loan back at all as the loan itself is illegal.

To report loan sharks please call the Stop Loan Sharks team on 0300 555 2222 or visit Stop the loan sharks website.