Loan shark problems are evident for individuals who are vulnerable to them. In simple terms, these sharks are illegal lenders. First of all they start off by appearing to be friendly towards vulnerable and helpless people. They also often target low income families. As a result a small loan can spiral into unmanageable amounts and can lead to threats and abuse.
Today we’ll look at some obvious and some not so obvious clues to spotting a loan shark and how to keep your eyes open to them.
6 Effective ways to spot loan shark problems
- Loan sharks will never offer any paperwork or a signed agreement. Hence there will usually be no trace of any written contract to call upon if problems arise.
- Furthermore they will refuse to disclose any information about interest rates. Which allows them to increase the debt to any amount they want to, without giving you any fair warning.
- Loan sharks rarely advertise their services in public. Most of all, they get their business through word of mouth advertising and recommendations. For a good example, Bob down at the local pub could be a loan shark.
- In some cases they may confiscate items as security against your loan. Some unfortunate victims have had to hand out passports, personal possessions and their cars.
- Crucially they will do their utmost to make sure the customer doesn’t get to settle their debt. Therefore hidden costs are almost always never mentioned. Miss G’s story* is one of many such incidents. She borrowed £3500 from a loan shark to support her family. She paid back double this amount and still owed another £6000. Miss G is one of hundreds of victims of loan sharks, and the amount due could rise to unfathomable amounts.
- A loan shark may resort to intimidating you and even threaten your life or family. They often don’t care if you’re facing financial difficulties. A father of six* who borrowed £20, had even contemplated self harm due to threats and harassment. Sadly they not only threatened him with phone calls, but also visited his home.
Who are usually the victims?
Victims of loan shark problems can range between 19 and 75. There have been cases of much older, individuals who have fallen prey to these loan sharks. As a result the Illegal Money Lending Team was set up by the Birmingham City Council to tackle this problem. According to them the most common reason to borrow is for everyday expenses. Individuals with poor credit are often unable to get credit from banks and other lenders. Ultimately they’re forced to resort to borrowing with loan sharks.
Organisations like the Illegal Money Lending Team and the FCA are building awareness. They educate young children and adults on being more aware of the operations of loan sharks. Further to this they help rebuild some of the lives that get affected. The identification of thousands of illegal offenders are bringing these people to justice, consequently removing them from our streets.
Final thoughts on Loan Shark problems
There are several alternatives to a loan shark if an individual has a poor credit history or is on a low income. Credit unions are a much safer option and are set up by people with common interests usually in the same area. As a result they are becoming more popular among borrowers and individuals looking to save.
Payday loans could also be a good alternative if used for financial emergencies. See CashLady Payday Loans to apply with some of the biggest lenders in the market.
Reporting a loan shark is easy and confidential. View more information about how to do so here.
*Illegal money lending team newsletter (Birmingham City Council).