Loan sharks are the lenders who are not licensed. They often charge high-interest rate on the money they lend. These unlicensed lenders often target poor people or people who have low income. People like them don’t have much choice as they are in urgent need of money and don’t have any other source.
Loan sharks are not regulated by the Financial Conduct Authority(FCA), and they act outside the law. They do not follow the FCA’s code of practice like the other licensed lenders.
Borrowing from Loan Sharks
When you borrow from a loan shark you get a short term loan at a very high-interest rate. Some of them charge APR as high as 10000%. That is just a huge interest rate, which you just cannot pay in time. And when you cannot make the repayments they harass you mentally and can even choose violence at times.
Some loans sharks pressures you into borrowing another loan, just so that you can pay your previous loan back. However, getting another loan from a loan shark is not a good thing to do as you can just get stuck in the circle of debts.
When you borrow from loan sharks you are not obliged to repay them. They don’t have a legal right to provide you a loan or recover it from you as they are not registered lenders. Only the lenders who have been licensed by the FCA are legal lenders.
Loan sharks sometimes threaten people and scare them by saying that they will be prosecuted and sent to prison if they don’t make the payment. Not paying back to a loan shark is not a criminal offence. However, if they are harassing you and threatening you a lot you can go to your local police and lodge a complaint.
Say No to Loan Sharks – Choose Other Ways to Borrow
There are a lot of licensed lenders who provide loans to people who have a bad credit, and low income. You can get guaranteed bad credit loans for your small money requirements. Although the interest rate with which you pay back the loan is higher than usual. This is because the lender is at risk here because of providing you with an unsecured loan.
You should look around and check deals from different lenders, not all of them provide you with a higher interest rate on the borrowed money. No matter how high the interest rates are, they are always way lower than the interest rate charged by the loan sharks.
Another way through which you can borrow money is credit unions. Credit unions work best in situations where you need a small amount and are low on income. This borrowing method is way for comfortable in terms of repaying than any other form of borrowing.