Common myths about loan sharks

There are lots of rumours and myths around loan sharks and what they do.

These are some of the most common ones, along with the truth.

The myth: ' Unlicencensed money lending is not illegal '
The truth: It is illegal for anyone to operate a money lending business if they don't have a licence for this from the Office of Fair Trading

The myth: 'If you borrow money from a loan shark, you are breaking the law'
The truth: It's the loan shark who is breaking the law - not the person who has borrowed the money. You can't be prosecuted for having taken a loan from a loan shark

The myth: 'You have to pay back what the loan shark says you owe'
The truth: Any loan made by someone without a licence is 'unenforceable'
this means you cannot legally be made to pay it back

The myth: 'Illegal money-lending is a victimless crime'
The truth: Those who have borrowed money from illegal lenders are often threatened and intimidated into paying back much more than they borrowed.
Whole communities can be affected if borrowers are forced to turn to crime to pay back out of control loans. Loan sharks are also often involved in other crime

The myth: 'Loan sharks are providing a reasonably priced service to people
The truth: A loan from a loan shark is, on average, three times the cost of the same loan from someone operating legally. Interest rates of between 8000% and 117,000% have been uncovered