Loan Sharks
  • April 22, 2022
  • admin

Last year Bryan was in dire need of money and struggled to have some cash in his hands. Finally, he found a lender willing to pay the amount he wanted at a very high-interest rate. Bryan agreed at the time.

The lender was a loan shark, and he got his holds on Bryan. In addition, by the end of term, when Bryan could not pay the amount, he sent some sketchy, armed men into his house and warned him to pay or it won't be good for him.

It was a traumatic experience. Bryan reported the incident to the police and got the required help, but he could not prevent the instigated fear from scaring his family.

Like Bryan, millions of people struggle with loan sharks every year. It is an unfortunate condition that makes people in the UK suffers.

A loan shark is a person who gives loans at exorbitant interest rates, has strict terms of collection if the loan is not paid back, and often works outside of the law. According to an estimate, more than three million people in the UK owe money by these illicit money lenders.

Individuals, who are jobless and particularly vulnerable and eager for money, often look for payday loans for unemployed on benefits to meet their financial needs. It attracts these illicit money lenders, who appear as God at the time of emergency but later prove to be the devil.

Borrowing money from a loan shark is very risky, and detecting one is not always an easy task. A loan shark will often appear to be a nice and helpful acquaintance at first, but what they are doing is reeling you into a false feeling of security before becoming increasingly aggressive and menacing.

What Does the Term Loan Shark Means?

As per the law, to lend money lawfully, the Financial Conduct Authority (FCA) in the UK must approve a money lender. It is important to note that money lenders that the FCA doesn't regulate) are breaching the law. These illicit lenders are referred to as loan sharks.

Loan sharks can be dangerous, not to mention illegal and must stay away. To recoup the money a money shark has loaned you, they may resort to criminal tactics such as threatening assault or seizing your belongings illegally.

You must have come across the news of people who could not pay money on time. They have to go into illegal activities such as prostitution or other things in some severe circumstances.

Loan sharks don't often have an office and frequently work from home. They will demand exorbitant interest rates and will not provide much documentation to back up their agreements with you.

Today, we discuss how to spot a loan shark and stay away from them. In addition, if you are caught in debt by a loan shark, how to recover from that.

Are Loan Sharks Dangerous?

Loan sharks often focus on young adults or the unemployed, as it is easy to get hold of them. They are the soft target. They are usually short on funds and look for loans for unemployed with bad credit fast. In the time of need, these loan sharks appear as a saviour.

Remember they do not catch you. It is better to be without money than be in debt to a loan shark. Note that all providers must have the approval and regulation of the Financial Conduct Authority to lend money legally in the UK, and you can ask for the documentation.

The FCA guarantees that lenders follow specific guidelines and that borrowers are protected somehow if they are getting loans for bad credit no guarantor no fees no brokers. On the other hand, loan sharks may not feel obligated to follow the FCA's industry guidelines, putting anybody who borrows from them in danger.

Even if you borrow a modest amount of money at first, a loan shark knows and practices tactics to snare you and leave you thousands of pounds in debt. Some loan sharks get involvement in other illegal operations, and they do not shy from pushing their clients into illegal actions.

After borrowing from a loan shark, people get sucked into a debt spiral, which may take years of implications that affect your finances, physical health, mental health, and relationships with family and friends.

How to Differentiate a Real Lender from a Loan Shark?

Prevention is better than cure, right! So, if you do need a loan, make sure you check the lender. Run all possible background checks before borrowing money. Following tips might be helpful.

  1. Check the Financial Services Register to discover if a lender is registered and authorised. Lending money without registration is illegal.
  2. Contact the FCA directly if you are unsure, even after checking its website.
  3. Ask them about the documentation. All legitimate lenders will give you the papers you need to understand the loan conditions. Loan sharks will never provide you with a paper and might try to skip that step.
  4. Sometimes a loan shark may impersonate an agent from a well-known lending company, ensuring that the person genuinely works for them by calling the firm directly.
  5. Ask how they lend money. Most loan sharks are known for dealing in cash. However, beware as few may also operate online.
  6. Check if your lender provides precise data on the interest rate and payback conditions. Loan sharks may be evasive regarding the interest rate they charge and when the loan will be repaid.
  7. See if the lender you are talking to is interested in running a credit check, as approved lenders will ask for that. Loan sharks do not do credit checks or affordability assessments.
  8. If your lender asks you to deposit your belongings like your passport or bank card as a kind of security, it's time to run.
  9. This is mostly not upfront and can be witnessed only at the time of payback. Loan sharks are popular for showing violent and threatening behaviour. They will employ intimidation and force.
  10. Sometimes a loan shark may appear as a friend. A new acquaintance or friend willing to lend you money and claim to be your "well-wisher". Don't just fall for a kind display. You should always be wary if they give you a loan if you don't know them well.

Do You Owe Money to a Loan Shark?

Now, if you think or know that you have borrowed from a loan shark, don't be afraid. Remember! You have not done anything unlawful. It is unlawful to lend money without the proper authorisation, but it is not criminal to borrow money from an unlicensed lender.

You should not be embarrassed or concerned about getting into problems. Information is power. Loan sharks may intimidate you, threatening to take you to court, but they cannot unless they have proper documentation.

If they are threatening, you may report a loan shark anonymously or with your identity with all the information to assist the loan shark inquiry. You should know that all loan shark reports are confidential and will come into investigation.

You can call the helpline for assistance. The helpline numbers are available on FCA and government websites. If you feel that you are in danger from a loan shark, call the police.

You can make a formal investigation complain or even request the security if you feel threatened. It is wise not to confront directly. Police and the authority will help you.

The Bottom Line

If you must borrow money, be very sure of your lender. Beware of private loan sharks. Instead, do research a lot and approach reliable private money lenders for bad credit UK. In general, follow a good finance practice. Regularly save money, so you don't require a loan as soon as possible.

Accepting cash loans is not a good idea, even if the lender appears kind and helpful. Look it up on the FCA Financial Services Register to see if a lender is legal. Credit unions are a safer option to obtain money from a loan shark if you need money.


A shark is a person who lends money at excessive interest rates, has strict collection terms if the loan is not repaid, and frequently operates outside of the law. According to Sharks, illicit money lenders owe money to 310,000 people in the UK. Learn to differentiate between a legitimate lender and a loan shark.

To find out if a lender is authorised to lend money, go to the Financial Services Register or the Loan Smart website. Loan sharks will not give you a formal contract and may take your possessions as collateral.

While lending money without the proper authority is illegal, borrowing money from an unauthorised lender is not. Call the authorities straight away if you're in danger from a loan shark. Check the FCA Financial Services Register to determine if a lender is legal.

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