Watch out for loan sharks this Christmas

The festive season can increase the risk of falling victim to loan sharks.

Published: 12/12/2023

Christmas is a time of celebration and presents for many, but it can also increase our concerns about money and what we can afford. Loan sharks know this and can prey on your worries by making you feel they're helping you when they're not. 

What is a loan shark?

A loan shark is someone who lends money without the legal authorisation from the Financial Conduct Authority (FCA). If the FCA hasn't authorised them, they're breaking the law.

Loan sharks come in all shapes and sizes, making it difficult to spot them. Many operate as individuals, but others can pretend to be part of a larger, legitimate company. 

They could be a neighbour, a parent you know from the school gate or even a long-standing family friend. According to the Illegal Money Lending Team (IMLT), in the first half of 2023, 56% of the people they supported said they thought they were borrowing from a friend. 

Loan sharks often appear friendly and trustworthy at first, offering small loans under the pretence of helping a friend. However, once they've lured you in, they can become more threatening and aggressive over time, demanding more and more money.

Spotting the signs of a loan shark

There are warning signs to look out for that could indicate someone is a loan shark.

Some signs to look out for are:

They don't offer any paperwork or details about the loan.
They only provide cash and want to avoid money transfers via bank accounts.
They demand repayments that add up to more than you initially borrowed.
They start to intimidate or threaten you if you're struggling to pay.
They ask for personal items like jewellery, bank cards or your passport as part of the loan.

Always check before you borrow

It's a good idea to check if a lender is registered with the FCA before you borrow from them. Remember, if they're not registered, they're breaking the law. You can find out whether a money lender is authorised by checking the FCA register. 

The IMLT advises contacting your local Credit Union instead of a loan shark if other legitimate lenders have refused you credit. Credit Unions are led by their members, offering affordable and safe borrowing options.

What if I already owe money to a loan shark?

Firstly, if you've borrowed money from a loan shark, you haven't broken the law - they have.

Stop Loan Sharks prosecutes illegal money lenders and supports borrowers. They can help if you owe money to a loan shark, are worried about someone else, or want to report a loan shark. You can contact them confidentially at 0300 555 2222 or via their website.

Citizens Advice and Crime Stoppers also offer advice and information on what to do if you've borrowed money from a loan shark.

Need more support?

We're here to help you save money and support you with financial and wellbeing concerns. Visit our supporting you and winter-ready pages to learn more.