Borrowing money is something most of us do at some stage in our lives. Perhaps it's a mortgage to help us buy a house, a bank loan for a new car or a credit deal with a trader to help us buy a new washing machine. But what do you do if you can't get this type of credit and you still feel you need to borrow money. Well, more and more people are now going to a moneylender. And while many moneylenders may be perfectly fair and honest, unfortunately some are not. It is these 'loan sharks' that you should try to avoid and we hope that the following information will help you to do that.
The Consumer Credit Act 1974 says it is unlawful for a person to carry on a moneylending business unless they are properly licensed by the Office of Fair Trading. However, it can be difficult to prove that a person lending money is actually running a business within the meaning of the Act. Loan sharks do not normally apply for a licence.
Credit providers want to lend you as much money or give you as much credit as they can. And so, if you can't get a loan from a more respectable source, there must be a good reason for it. It's probably because your present income and debt would cause you real problems in repaying any new loan. While this may be hard for you to accept, it's probably better that you do instead of getting involved with a loan shark.
Loan sharks will lend you money even when everybody else has turned you down, but they'll also charge you very high rates of interest. You'll struggle to repay the loan and the next thing you'll know is that you're taking out another loan to repay the first one. Then, perhaps you'll take out another loan to repay the second loan and you just keep getting deeper and deeper in debt.
If you do get into arrears with your repayments, the nice, helpful loan shark may turn nasty. He may physically threaten you or your family. He may also demand any social security benefit book you may have. All of this is against the law, as is threatening you by letters or phone calls. Neither may you be harassed at home or at work. If you are in such a position, you should complain to the police.
Not repaying a debt is not a criminal offence. And so, you should ignore any threat from a loan shark that he will take you to a criminal court. It's also extremely unlikely that he'll take you to a civil court. As we've said earlier, loan sharks do not as a rule apply for a licence and they are unlikely to have anything to do with a court where their authority to lend money might be questioned.
Loan sharks are not licensed to lend money. They operate outside the law and do not fear it. And so, if you complain about them, they may put you under even more pressure. However, if you are being threatened or harassed, you should complain to the local police. You should also contact Consumerline on 0300 123 6262 for further advice.
From category: Money Matters