Loan sharks making a comeback

As the recession bites it seems loan sharks are making a comeback as sub-prime loans are no longer readily available.

Loan sharks are illegal money lenders. They are unlicensed and not regulated by the financial services industry.

Those who cannot get credit from legitimate sources can end up turning to loan sharks and find they are paying ridculously high levels of interest.

According to a report by the New Local Government Network (NLGN), some 200,000 people in Britain are at risk from illegal loan sharks as they cannot access traditional loans, either secured or unsecured loans.

Chris Leslie, author of the NLGN report, says ‘There is evidence to suggest that the pernicious trend of illegal unsecured lending at extremely high rates of interest, or ‘loan sharking’, is making a comeback. The diminished availability of regulated sub-prime credit is creating conditions where a sizeable number of people have little option but to borrow from illegal sources.’

Leslie added ‘At least 165,000 people already use loan sharks in the UK and we can expect the number to rise sharply.’

People struggling to get credit often find that they have a poor credit rating, meaning a lender is more likely to reject an application for credit or at best offer credit at a high rate of interest.

Before falling to loan sharks or higher interest rates on conventional loans, you may be able to improve your credit rating by checking your credit report and taking some simple steps.

To help assess what action you can take, you might find it useful to look at articles MoneyHighStreet has prepared on ‘Your credit rating – how to improve it‘ and ‘Save money without losing out‘.