MORE than three million borrowers have turned to a loan shark in the past three years, research suggests.
Borrowers who can’t get loans from high street banks are falling prey to these illegal lenders as a result of soaring living costs, a report by non-profit body Fair4All Finance has found.
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It often begins with a casual introduction to a “guy down the pub” or “friend of a friend”.
But it can quickly lead to threats of violence, sexual harassment or blackmail, if payments are late.
Alley Einstein and Mel Hunter investigate and reveal how you can find safe alternatives if you need some emergency cash.
‘Every time phone rang I jumped’
WHEN Sabby Cullen lost her job as an admin worker last April, she was left fearing for her life after borrowing £100 to pay her car loan.
“I had a tenner in my handbag when I arrived at work to be told the company had gone under and there was no cash for anyone,” she said.
The 27-year-old, from Colchester, said she owed rent to her grandma who she lived with and had a car payment due.
“I spent 12 hours desperately trying to secure a payday loan but kept being rejected because of my credit rating.
“A friend of a friend told me a local ‘money man’ down the pub could do cash loans, with no questions asked.
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“They warned me the fella was tough, but if it was just a hundred I’d be sweet, so I texted him.”
The man handed over the cash at the park and she agreed to repay double the sum — £200 — in four weeks’ time.
When the time came, Sabby had a new job in marketing but hadn’t yet been paid.
“I scraped together fifty quid and took it to the park to explain.
“He took it and said the new fee was £1,000 and I had a month to pay or it would double to £2,000.
“I mumbled that he couldn’t be serious and that’s when he turned.
“He came up close, right in my face and said ‘I don’t do jokes’ and ‘if you don’t get the cash I’ll make your life a misery’.
“I’ve never felt so terrified. I ran home.”
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Every night she’d get an intimidating phone call from the man or one of his associates.
“I was crying every night, I couldn’t breathe, I was anxious and shaking. Every time the doorbell rang I jumped.
“A friend came round after I missed her birthday and when I confided in her she lent me part of the money — the rest I paid back with the whole of my first pay cheque.
“Loansharks are brutal, I ended up with severe anxiety, my work suffered and I am still paying back my friend.
“Even now I panic when my phone beeps.”
Sabby had a warning for others. She said: “You could be risking your life borrowing from people like this.”
‘Coercive control keeps debtors trapped’
BORROWERS across the country told similar tales, according to the Fair4All survey.
In 287 interviews, most people who turned to loansharkshad been previously refused by mainstream lenders.
People borrow an average of £3,000 and typically borrowers have to repay at least double.
Loans are often used to pay off other household debts or big expenses such as birthdays and Christmas.
While seven out of ten, who currently still owe money have a job — earning around £25,000 a year.
Sharks keep borrowers trapped by demanding unaffordable payments so they have to take on more debt.
In one shocking example shared by Fair4All Finance, a man called Michael borrowed £250 to buy a car when he was just 17.
Every time he missed a payment the loan shark would say his debt had doubled.
It was only when he was 35 and the shark threatened to harm his children that he sought help, by which time he had repaid a colossal £90,000.
While reports of actual beatings were rare, the fear of violence was used to intimidate borrowers.
Lenders use “coercive control” to manipulate borrowers, Cath Wohlers of the England Illegal Money Lending Team.
She said: “They might threaten to tell the borrower’s employer that they are a thief, for example.”
Some of those interviewed had been sexually harassed by sharks or forced to work for their lender if they couldn’t make payments.
In one case a woman was made to clean an entire office building and told she’d cleared just £30 of her debt.
Who are the loan sharks?
- THEY are often business owners, religious leaders and prominent figures in the community, researchers found.
- Two out of five are women.
- They might present themselves as a mate – in fact, half of victims see their lender as “a friend”.
- Some operate on social media and lend by bank transfer.
- Anyone lending money for profit without a consumer credit licence is acting illegally. Contact stoploansharks.co.uk.
Where to get help with debt
PEOPLE who turn to loan sharks for money often feel like they’ve got no other option.
But Fair4All Finance boss Sacha Romanovitch is on a mission to change that.
She said: “If people need money to feed their children or pay their rent, there is help out there, from unclaimed grants through to support from credit unions and community finance.”
In the UK there are 400 not-for-profit Credit Unions and a small number of Community Development Finance Institutions.
You must be a member to borrow from a credit union and interest is capped at 42.6 per cent a year.
CDFIs offer short-term loans of around £400 to £500 on average — as an alternative to high-cost payday lenders or illegal sharks.
They are typically more expensive than credit unions with rates up to 300 per cent.
To find your local credit union at findyourcreditunion.co.uk or go to findingfinance.org.uk to find other legitimate loan providers.
Run a free benefits check at betteroffcalculator.co.uk to make sure you’re not missing out — £19billion a year goes unclaimed, according to Policy in Practice.
