Jaws may have had people thinking twice about taking a dip in the ocean back in the 70s – but when it comes to creating waves of panic in 2024, loan sharks present a much scarier proposition.
And yet, despite a reputation for being the bad guys of the loan industry, they remain a very real and very dangerous part of the financial landscape.
On average, there are 300 google searches for loan sharks every month just in the Lancashire and Cumbria area, while there are currently 1.08 million people across the UK owing money to an illegal lender.
So, how do we change the payday lending tide and stop the population from drowning in a sea of debt? Caution and education – starting right here.
Five reasons loan sharks should be avoided at all costs
- Excessively interest rates: Annual percentage rates charged by loan sharks can soar into the triple digits, making repayments a daunting task for borrowers.
- Cycle of dependency: These high interest rates can trap individuals in a cycle of debt, leaving them struggling to pay off the loan while accruing additional fees. They may then find themselves continuously borrowing from the loan shark in order to meet their obligations, which can be detrimental to their financial and mental health.
- Lack of legal protections: When dealing with loan sharks, borrowers have minimal legal protections compared to traditional lending institutions. Loan sharks operate in the shadows, evading regulations that are in place to protect borrowers. As a result, individuals who fall victim to their predatory practices may find it challenging to seek legal recourse.
- Coercive collection practices: Loan sharks are known for adopting aggressive and intimidating tactics to collect repayments. This can include threats, harassment, even physical harm.
- Impact on communities: Loan sharks tend to target, not just vulnerable individuals who may be in dire financial straits, but whole communities where access to traditional banking services is limited. This can lead to greater financial instability, crime, and a general decline in the quality of life within these areas.
How can I spot a loan shark – and what is the alternative?
Spotting a loan shark isn’t always easy. However, there will always be red flags. Excessively high interest rates and a lack of formal documentation are two of the main ones to be on the lookout for.
If you have your suspicions that something isn’t quite right, you can check that the lender you want a loan from is legal by checking the FCA website. If you suspect that you have borrowed money from a loan shark, you can report them anonymously via the Stop Loan Sharks website or through the government.
Desperate times can lead to desperate measures, but you should always take the time to carefully research your lending options before agreeing to anything.
Credit Unions are everything loan sharks are not – we operate within a legal framework, offering affordable interest rates and flexible repayment terms. We encourage our account holders to save, and we invest your money back into your community.
Contact us today for more information. And rest assured, we don’t bite.