Loan Shark 101
Loan sharks, or the ‘home credit industry’, are people who lend money without a licence from the Office of Fair Trading. They lend money illegally and at much higher interest rates than licenced financial institutions.
Loan sharks’ operation tactics
This is a branch of the industry that shies away from paperwork. This makes it difficult for the clients to know how much they owe. Clients who miss payments are often threatened – broken kneecaps being the cliché – and may end up paying more towards the loan. The interest charges are incredibly high. Some charge more than 100% and others charge interest of up to 1000%.
How to avoid them
People who approach loan sharks should get debt help instead. There are a number of different companies, such as Harrington Brooks, who are there to help you with your finances and any debt worries that you may have.
Other (safer) ways to borrow money
Debt management companies
Instead of going to a loan shark, you may consider working with a reputable debt management company. These companies can help you to minimise your monthly personal debt repayments with a consolidation loan or with a debt management programme.
Credit unions belong to their members and they offer savings and loans. Each credit union has different membership criteria but it may simply be that you live in the same area as the credit union.
You could ask one of your friends or family members for a short-term loan. This is – in most cases – a safer method than risking your life and credit record with a ‘home credit industry’ loan. However, be sure that you can afford to repay this loan as you may find that it puts unnecessary strain on those relationships.