Dealing with an unlicensed lender
such as a loan shark or a money lender is never a great idea. You are far better protected and will get a better deal from a licensed and reputable lender such as a bank or other financial institution. But, the fact is, that many people simply cannot get credit the traditional way and have to rely on local moneylenders or loan sharks when they need some extra cash.
This can cause a lot of angst and stress.
Your average moneylender or loan shark will charge extortionate rates of interest that will make even the smallest debt impossible to pay off. And, they aren’t going to be sending you a polite letter if you don’t make your repayments on time either. It’s not uncommon for them to use threats and even violence if you don’t stick to your agreement with them.
Even those that don’t use threats or violence may use other ways to intimidate you. They may well simply keep offering to lend you money to help you pay back what you borrow from them. It won’t take more than a few loans here to put you in debt so badly that you won’t know where to turn.
So, what should you do if you’ve got in over your head with a moneylender or loan shark? Well, the first thing to remember is that they cannot threaten you with legal action -- if they are not licensed to lend money in the first place then they cannot enforce the agreement you have with them through traditional legal lending routes. Unlicensed moneylenders and loan sharks are working outside of the law. Threats of taking you to court are empty threats.
Your first move -- if you have borrowed money form an unlicensed source -- is to report them. You can talk to your local Trading Standards Office in the first instance. They will be able to give you advice on where you stand legally and what you can do to make your situation better.
If your loan shark or moneylender is chasing you for their money and using threats of violence or even violence itself then you must act quickly. Try not to be intimidated. If they threaten the use of violence or are violent towards you or your possessions then you should contact the police as soon as you can. They will be able to help you out here.
If you are having serious problems
getting credit and feel that you have no other option than to use a loan shark or a moneylender then do take some qualified advice first. There is a credit/debt solution out there that will almost definitely suit you better and that will come at a fairer rate and with less stress.
If you are not sure which way to turn then make an appointment at your local Citizens Advice Bureau to start with. Their qualified advisors will be able to give you independent and confidential advice on your options and you won’t need to pay for the service.