Debt

Loan sharks are illegal money lenders who exploit people, including those on low incomes. Unfortunately, as the cost of living rises, more people are falling victim to loan sharks, sometimes with shocking consequences.

We want to let you know that if you’ve borrowed money from a loan shark, help is out there. Stop Loan Sharks is an organisation that prosecutes illegal money lenders and provides support for borrowers. We asked Catherine Wohler from Stop Loan Sharks (pictured below) to tell us more about the issue and how to get support if you or someone you know has been affected by loan sharks.

How big is the problem of loan sharks?
It’s widespread. A report by the Centre for Social Justice in March 2022 estimated that 1.08 million people in England are currently using illegal money lenders. That’s 2% of the population and this was before the cost of living crisis really kicked in.

Are you seeing more cases since the cost of living crisis hit?
For the first time victims of loan sharks are telling us that they’re borrowing to buy food, fuel and gas and electricity. Historically, people have borrowed to cover everyday living expenses, but these have been one-off items, for example, a tyre for the car or a new washing machine.

When we hear ‘loan shark’, we might imagine a tough-looking, intimidating man, but that’s not always the case, is it?
Absolutely not. Last year, one in five of the people we arrested were female. We’ve arrested people well into their seventies for illegal lending.

Loan sharks are often the person you least expect. They could be a mum at the school gates or someone you work with. They could be someone you’ve known for years down the pub and chatted to occasionally. Most people, when they take a loan, genuinely believe they’re borrowing from someone who’s helping them out.

What should set off alarm bells that someone’s a loan shark?
Any loan without paperwork is dodgy because all authorised lenders will give you paperwork. This should include things like the interest rate, what happens if you miss a payment and the length of the loan. Loan sharks don’t give you this information because they want to keep you in the dark.

How can we check if a lender is genuine?
Genuine lenders must be authorised by the Financial Conduct Authority (FCA). You can search for a name or company to check they’re registered with the FCA here.

If you’re in any doubt just give Stop Loan Sharks a ring and we’ll help you sort out if they’re legitimate or not. Our 24/7 hotline is 0300 555 2222. We also have Livechat on our website, available Monday to Friday 9-5.

Have you got any examples of people who’ve borrowed money from loan sharks and the effect it’s had on their lives?
We helped a woman called Kelly who had a terrible experience with a loan shark. She has four children, she was working and earned £1,090 a month topped up with Universal Credit. One day, the kids wanted different food than she had in the fridge. They were nagging her and she’d had a bad day. Her sister’s friend offered to lend her £100 so she could buy the kids some treats. She said, “Oh go on then, it’ll give me a bit of peace – it’s only a £100. I’ll pay it back.”

Her sister’s friend turned out to be a loan shark. She wanted £320 back. When Kelly paid her back on pay day, it left her short, so she had to borrow money again. The debt spiralled and it got to the point where Kelly had borrowed £2,500 in small loans - but she’d paid back £26,000. The loan shark was still saying that she owed £43,000. In that time, Kelly had isolated herself from her family and friends. She was arguing with her partner because he didn’t understand where her money was going. And from her £1,090 from her wages, the loan shark was taking £900 every month.

Kelly shut down and it got to the point where she was seriously considering taking her own life. She couldn’t see another way out.

Talking to her housing officer was the turning point. When she told them about her situation, they supported her to contact us, we arrested the loan shark and from then on Kelly was free.

What advice would you give someone who’s been offered a loan by someone they suspect may not be a legitimate lender?
If you’ve got suspicions, it isn’t worth it. Think about Kelly, think about how a £100 loan very quickly turned into a £43,000 debt. It’s so easy to get in with a loan shark, but it’s so hard to get away from them.

Are there other sources of credit they could use?
Credit unions are brilliant. They are ethical, affordable, legal lenders. The amount of interest they charge is capped by legislation. They treat people as individuals. It’s not ‘computer says no’. They can offer small amounts of money. Sometimes banks only want to lend large amounts, but credit unions will lend £100-200. Search for your local credit union here.

Should you ever borrow to get out of debt?
No. Borrowing more money will add further interest to your debts. It’s much better to talk to your creditors and get free debt advice from charities Stepchange, PayPlan or Citizens Advice.

Say I’m on a low income, I’m struggling to make ends meet. I was approached by someone who offered me money. I took out a loan because I was desperate and now they’re charging me massive rates of interest and threatening me and my family. Things feel desperate – what can I do?
The best thing you can do is talk to Stop Loan Sharks. We’ll talk to you in confidence. You could ask your housing officer to support you to make that first phone call. The idea of reporting a loan shark can be scary, but we’re very good at looking after people. I’ve been doing this job for 15 years and I’ve never had anyone say to me: “I wish I hadn’t reported the loan shark.” But I’ve had plenty of people say: “I wish I’d reported the loan shark sooner.”

We don’t judge. Whatever it is that has happened, we will have seen it all before. You’re not going to be forced to do anything you don’t want to do. You don’t even have to tell us your name if you don’t want to. Just let us tell you what support we can offer. Then you can decide what you want to do next.

If you could sum up your main messages for customers about loan sharks, what would it be?
If you’re in the grasp of a loan shark, help is available. Don’t suffer alone. Unfortunately, people think that they can pay loan sharks off but in most cases you can’t. We’re here to help. Please speak out.

My other message is, if you haven’t borrowed from a loan shark please be careful. Buyer beware: if it looks too good to be true, it probably is.

More information

• If you’ve borrowed from a loan shark or are worried about someone else, Stop Loan Sharks is there for you. Call them 24/7 on 0300 555 2222 or start a Live Chat by clicking on the chat icon in the bottom right hand corner of their website. This service is available 9am-5pm, Monday to Friday.
• If you need help with money, Curo’s Money Advice service provides help for residents. Please don’t be afraid the get in touch if it's your first time. Our friendly and experienced team can help with managing debt and accessing the correct benefits. They have access to grants and funds that you may not know about. The average amount each customer saves through using the service is £4,446. Call the Money Advice service on 01225 366000, or email: customeraccountshelp@curo-group.co.uk