Loan Sharks
Customers who wish to take out a loan but have been refused by conventional lenders may be tempted by, or feel they have no option but to borrow from, a loan shark. Loan sharks are unlicensed lenders whose business is not regulated by the Office of Fair Trading (OFT). As they operate outside of the law, loan sharks offer loans on very bad terms with interest rates far exceeding those of licensed lenders (whose rates are regulated); they may also employ violent measures to force their customers to repay the money they have borrowed. It is extremely inadvisable for anyone to borrow from a loan shark.
You can check on the status of a lender to see if they are licensed by the OFT by contacting the Consumer Credit Public Register. They list everyone with an OFT licence, as well as everyone who has applied for one or has had one confiscated or suspended. Basic information such as trading names and activities for which a business is licensed can be obtained free of charge by calling (+44) 020 7211 8608 between 9.30am and 4pm Monday to Friday. It is safe to assume that if a lender is not listed on the register, you should not borrow money from them.
If you have repeatedly been refused credit, you should seriously consider whether you should borrow money at all. There are reasons why lenders refuse applicants: perhaps you have a history of missed repayments, or were recently declared bankrupt. It is not a good idea to pursue a loan at any price: you could lose your home, or find yourself in a threatening financial situation. If you need money urgently, visit your local Citizens Advice Bureau. Professional advisers can analyse your situation, and may be able to suggest legitimate sources of financing.
If you have already borrowed money from an unlicensed lender, see:
