Beware of loan sharks

If you’re struggling with money, you may think that turning to a loan shark is your only option, but it’s not. Please do not be tempted to use them!

Once you start using a loan shark, they’re very difficult to get rid of. They can cause a whole lot of extra stress and worry, rather than helping solve your money troubles. 

How to tell if it’s a loan shark

They may not wander round with shark fins strapped to their backs, but there are some tell tales signs that the person trying to lend you money is a loan shark. These include: 

•    There’s no credit agreement and they just tell you ‘you owe me this much today’
•    They’re likely to use threats, violence or intimidation
•    They probably won’t give you a receipts or a payment book
•    They might take valuables before lending money, like a cash card or jewellery 
•    They’ll lend to under 18s
•    There are high charges if you don’t pay  

If you’ve borrowed money from a loan shark, you’re not legally obliged to repay the debt.  Loan sharks sometimes scare people saying that they’ll be prosecuted too – this isn’t true. 

Borrowing safely

Before taking out any sort of loan you should always make sure you have a written agreement setting out what you’re borrowing, what you have to pay back and by when. Always make sure you know how much interest you’ll be expected to pay back and what extra penalty charges you’ll need to pay if you fall behind with your repayments.  

To give you an idea of the extra costs you could be charged by a loan shark, if you borrow £100 over 12 months from a credit union and you repay regularly every week, the total you’ll pay back is £128.95. A loan shark can charge whatever they like. Average rates are 825% which means if you borrow £100 over 12 months, the total you’ll need to pay back is £925! Ouch!

To find out about credit unions near you, visit www.findyourcreditunion.co.uk

If you have any suspicions about someone who offers you a loan, no matter how small, report it to: reportaloanshark@stoploansharks.gov.uk or call 0300 555 2222