Loan sharks are illegal money lenders who operate outside of the law and can be extremely dangerous. They often prey on vulnerable people who are in desperate need of money and charge extortionate interest rates that can leave borrowers trapped in a cycle of debt for years.

In the beginning, loan sharks may come across very friendly, however their attitudes can change quickly if you do not keep up with your repayments and, in some cases, they use threatening and intimidating behaviours.

If you need money and are considering taking out a loan, it is important to be aware of the dangers of loan sharks.

Check the lender's credentials

Legitimate lenders are regulated by the Financial Conduct Authority (FCA) and will have a license number that you can check online. Loan sharks will not be licensed and will try to avoid providing any details about their business. It is important to research the lender before accepting a loan to ensure they are legitimate.

You can check here to ensure they are authorised by the FCA.

Watch out for high-pressure sales tactics

Loan sharks may use aggressive sales tactics to convince you to take out a loan. They may also try to rush you into signing a contract without giving you time to read it properly. If a lender is putting undue pressure on you to take out a loan, it is likely they are not operating within the law.

Avoid cash loans

Loan sharks will often only offer cash loans and will not provide any paperwork or receipts. Legitimate lenders will always provide a written contract and will offer different payment methods. If a lender is only offering cash loans, it is likely they are operating illegally.

Look for hidden fees

Loan sharks may try to hide additional fees or charges in the small print of the loan agreement. Make sure you read the contract carefully and understand all the terms and conditions before signing. If a lender is not upfront about the fees associated with the loan, it is likely they are trying to hide something.

Never hand over your bank details

Loan sharks may ask for your bank details as a form of collateral. Never give out your bank details to anyone you do not trust, as this could leave you vulnerable to fraud or identity theft. If a lender is asking for your bank details, it is likely they are not operating within the law.

If you are struggling with your finances and need to borrow money to help ends meet, there are other options.

• Credit Unions – Credit Unions are a great option for low interest loans, and for financial advice and assistance
• Government – Ensure you are receiving all the benefits you may be entitled to. Martin Lewis, the Money Saving Expert, revealed in an article that up to 7 million people are missing out on benefits they are entitled to
• Speak to your service provider/bank – If you are struggling wit your bill payments speak to your provider as they may be able to accommodate breathing space or create a payment arrangement

Loan sharks are a dangerous and illegal way to borrow money. If you are in need of a loan, it is important to research the lender thoroughly and ensure they are legitimate. You should also be wary of high-pressure sales tactics, cash loans, hidden fees, and never give out your bank details.

If you suspect that you have been approached by a loan shark, it is important to report them to the authorities as soon as possible.

Citizens Advice instruct that if you believe a money lender is operating without FCA authorisation to call the Illegal Money Lending Hotline on 0300 555 2222 or email the team at [email protected] or alternatively text loan shark and your message to 60003.

By contacting them they can give you advice on your situation and it enables them to take action to stop the illegal lender. 

For more information on loan sharks and how to stay safe, visit gov.co.uk