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Loan shark debt. What to do if you owe money to an illegal lender.

"Loan sharks" are people who charge you to borrow money but are not regulated by the Financial Conduct Authority. What they do is illegal, but you have done nothing wrong. It is not a crime to borrow money from someone.

Loan sharks will try to:

  • Charge interest
  • Add fees
  • Make a profit

They are not allowed to do this.

They may also:

  • Threaten or harass you
  • Try to get you to borrow more

They sometimes use trust or friendship to trap people in loans they cannot afford.

Ask for help if you think you may be the victim of a loan shark.

This is not your fault. Loan sharks are hard to spot.

  • The terms of the loans can vary
  • How they collect the money can change
  • They may be someone you know and care about

Did you borrow from a friend or family member?

Friends and family loans are common and usually nothing to worry about.

But it is important to check a few things.

  • Do you feel pressure to repay more than you can afford?
  • Is the debt growing?
  • Is the friend or family member adding interest or charges?

Get in touch if you are worried. We can give you confidential advice.

How do I know someone is a loan shark?

Not every friend who lends you money is a loan shark. Loan sharks are people who make money off their loans.

Here are some warning signs:

1. The person wants interest but gives you no paperwork

  • Loan paper work should include:
  • The overall cost of the loan
  • A complaints procedure
  • Ombudsman details

2. They refuse to give you information about the loan

  • This includes:
  • Any interest
  • When they want to be paid back
  • What happens if you do not pay on time

3. They want to keep something of yours until the debt is paid

  • Things like:
  • Your mobile phone
  • Passport
  • Cash card

4. They take things from you if you do not pay on time

5. They keep adding interest or charges so the debt never goes down

6. They can scare you or be violent when you do not pay

Not all loan sharks act like this.

Some pretend to be doorstep lenders- which are a real, FCA authorised way to borrow money.

They may even give you a payment book or an agreement to sign.

  • Make sure the FCA allows them to lend money
  • They are probably a loan shark if not

Is it a bad idea to borrow from a loan shark?

Borrowing from a loan shark has many risks.

  • There can be high and unmanageable interest rates
  • Loan sharks charge much higher interest than high street lenders
  • They may talk about “double bubble” but it is really a lot more
  • You may be threatened for not paying on time
  • This can include being followed or bullied
  • Things can become violent
  • You may need to borrow more money to pay back your first loan
  • This gives the loan shark more ‘power’ over you
  • They may ask you to do things for them in return
  • They may increase their threats and violence

Loan sharks use many tactics to gain your trust.

  • They may be friendly when you first meet them
  • They may act like they understand your problems
  • They may switch between scary and nice to keep you on your toes

What can I do about a loan shark debt?

They may try to scare you, but a loan shark debt is not your fault. Remember:

  • You have done nothing wrong
  • You are not a criminal
  • You will not be in trouble for getting help
  • The loan shark is committing a crime, not you
  • You do not have to pay the money back
  • A loan shark has no legal right to collect money that was lent illegally
  • Do not stop paying a loan shark if you are worried about your safety
  • Get advice from a specialist before you make a decision

Specialist illegal money lending teams can:

  • Give you confidential help
  • Investigate your lenders
  • Prosecute illegal lenders

Can a loan shark take you to court?

Loan sharks cannot take you to court for money. It was illegal for them to lend it to you.

What happens if you do not pay back a loan shark?

Owing money to a loan shark can be scary. But you are not alone.

Help is available 24 hours a day.

The teams below will:

  • Listen to your situation
  • Offer guidance and support
  • Maybe even stop the loan shark

You can speak to them anonymously.

  • England Illegal Money Lending Team – 0300 555 2222
  • Wales Illegal Money Lending Team – 0300 123 3311
  • Scotland Illegal Money Lending Team – 0141 2876 655

There is no dedicated Illegal Money Lending Team in Northern Ireland, but you can:

  • Contact PSNI
  • Give them information
  • Ask for guidance on your options
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Is a short term loan right for you?

Short term loans include:

These can seem convenient if you need money fast, but:

  • They are an expensive way to borrow
  • They can leave you worse off financially

Make sure you can afford to repay the full amount – including the interest.

Think about what might happen if you fall behind with payments.

We might be able to help if you feel you need high-interest credit to cover you basics.

There are cheaper ways of borrowing, including:

You may be able to get support from a trust fund or your local council if you are on a low income and need emergency help with money.

How can I tell if a company is authorised to lend money?

It can be hard to tell someone is lending money illegally, especially if they:

  • Act like a normal business or
  • Seem like your friend

Call the Financial Conduct Authority (FCA) helpline to find out if a business has a valid authorisation.

Have the payment book or any agreement with an address or licence number on it when you call.

Sometimes a business may have authorisation for other financial activities, but not lending.

They are breaking the law if they lend or collect money.

Report a loan shark

You can report a loan shark anonymously.

Report a loan shark in England

Find out how to report a loan shark in the rest of the UK

Are there alternatives to borrowing from a loan shark?

There are safer ways to access money or cover expenses even if you are on a low income or have a poor credit rating.

They include:

1. Help from the government

2. Credit unions

  • Help you save money and offer manageable credit products
  • There is likely to be a credit union in your local area
  • They consider credit applications from people with poor credit ratings

3. Lending schemes through your employer

  • Talk to your HR department
  • Ask if they can offer any short-term assistance, such as:
  • An advance on your wages
  • Overtime

4. Assistance with your utilities

We can help

We will not judge you if you think you borrowed from a loan shark.

Everything you tell us is confidential.

Use our online debt advice to get started.

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We're here to help. Use our free online debt advice tool.

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