In moments when we are desperate for cash, especially if we have a family to look after, we may be willing to go down any avenue, including seeking the help of a loan shark.
Loan sharks are illegal lenders, who will target vulnerable people that are seeking finances and have been constantly turned down by high street lenders. They appear friendly and supportive, offering to lend you any amount without credit checks, which can seem like a wonderful opportunity, but may become a complete nightmare.
How do they operate?
Loan sharks operate without the authorisation and a licence from the OFT (Office of Fair Trading). They approach people who have been struggling with debt and have been unable to secure credit. There is often no paperwork involved when dealing with a loan shark, which means you will be unable to track how much you owe and what interest has been put on the debt by the loan shark. This means they can charge you as much as they feel and add debt on top of the current loan without asking permission.
If they do provide paperwork, in most cases the language used is so confusing, that a borrower is unable to interpret the terms and conditions.
As they work without the backing of an authorised financial and trading body, they can employ whatever tactics to get as much money out of their victims as possible. They will also provide no support for those unable to pay back the high amount of interest they put on, often resorting to violence to get the money back. As mentioned previously, they target those who are vulnerable such as the elderly, low-income, minorities, essentially, anyone they can intimidate.
How do I spot one?
As we have mentioned before, Loan Sharks tend to operate without paperwork, so that is the first sign. They will also refuse to give any information regarding the loan such as how much you still owe or the interest rate.
A Loan Shark can become aggressive if you are in a situation where you are unable to pay back the loan. If you feel you are dealing with someone who might be a bit shady, you can look up their credentials either through the OFT or the FSA register (Financial Service Authority).
One of the key things to remember if you find yourself dealing with a Loan Shark is that due to them operating outside thee FSA and OFT, you are not obliged to pay back the loan because they are working illegally. They often threaten their victims with legal action if they fall behind on their debts, but as they are acting illegally, it is an empty threat and will never be followed through.
What can I do if I find myself dealing with a Loan Shark
The first thing to do is contact your local Trading Standards office, and as they are the ones breaking the law as unlicensed lenders, you will not be prosecuted. You should always seek the aid of a licensed lender who can provide a range of financial products to help with debt or debt management. You should also remember a Loan Sharks must never be considered a last resort and a licenced vendor can provide you credit, even if you have had a problematic credit history.
By Harry Price
Harry Price is a busy young man. In addition to full time writing, he’s an accomplished painter and sportsman.