Illegal lending: loan sharks

Loan sharks might seem friendly. And if you keep up your repayments, they might stay that way.

But borrowing from them will still get expensive.

There are many risks to borrowing from a loan shark, for example:

• you pay far more in interest than you would through any legal borrowing
• you might be harassed or threatened if you get behind with your repayments
• you might be pressured into borrowing more money to repay one loan with another and end up in a spiral of debt that you can't repay.

It’s important to avoid borrowing from people who you don’t know well, such as colleagues, casual acquaintances, friends of friends, or people you recognise in your local community or faith group. This is because they could be a loan shark.

Here are some of the signs to look out for if you think you might be borrowing from a loan shark:

• No paperwork – paperwork makes something seem more legitimate, and loan sharks avoid.
• Cash loans or bank transfers – although more loan sharks are now using bank transfers, they usually prefer to deal with cash.  
• Refusing to give you information about the loan – most loan sharks will avoid giving you clear details about your loan, such as the interest rate, details of previous repayments and the total amount you owe.
• Taking possessions for security – some loan sharks will take personal possessions as security, such as your passport or bank cards.
• Your loan is getting bigger – loan sharks might increase the debt or add extra charges at any time, even if you’re making regular payments.
• Threats of violence – loan sharks often use intimidation and threats to frighten people into paying back the money.
• They lend to more than one person – if it’s someone you know and you’re aware that they’ve offered to lend money to other people too.

If you’ve already borrowed from a loan shark, you haven’t broken the law and there is help available. Find out more on the Stop Loan Sharks websiteOpens in a new window

Anyone lending money must be authorised by the Financial Conduct Authority (FCA)Opens in a new window

If a lender isn’t listed as having authorisation to lend money, don’t borrow money from them and don’t let them come into your home.

Any lender, authorised or not, who harasses you is breaking the law. 

Some loan sharks will threaten you by saying you’ll be prosecuted and even sent to prison if you don’t pay them. This can’t happen.

An unauthorised lender such as a loan shark doesn’t have the legal right to make you pay back the loan at all. This is because the loan itself is illegal.

If you’ve been approached by someone you think is a loan shark, contact the police. Call 999 if you’re in immediate danger.

Loan sharks will never stop chasing you for money, so it’s important you act as soon as possible. Anything you tell the police will be confidential and you can remain anonymous.  

If you’ve found out that a lender is a loan shark, you can report them anonymously. You can either call or make a report online if you’d prefer not to talk to someone:

• If you live in England, you can report them to the Stop Loan Sharks team by calling 0300 555 2222 or visit Stop Loan Sharks.
• If you live in Scotland, call the Scottish Illegal Money Lending Unit on 0800 074 0878 or Trading Standards Scotland.
• If you live in Wales, call the Wales Illegal Money Lending Unit on 0300 123 3311 or visit their websiteOpens in a new window
• If you live in Northern Ireland, call the Trading Standards Consumerline on 0300 123 6262 or visit nidirectOpens in a new window

If your income is low, you have a poor credit score or you only need a small amount of money for a short while, there are regulated lenders you can turn to instead of loan sharks.

Find out more in A simple guide to credit cards.

If you’re facing higher living costs, find out about extra source of income and support in our section  Help with the cost of living.

If you’re short of money, make sure you’re getting all the benefits you are entitled to. If you’re already claiming benefits, you might be entitled to a Budgeting Advance or Budgeting Loan.