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A phenomenon that had had been declining is making a comeback. The seedy dangerous world of the loan shark is experiencing a new surge of popularity as progressively greater numbers of people are refused credit by the major and sub-prime lenders.

‘Loan sharks’ is the term used to describe money lenders who operate illegally. These lenders are not licensed by the financial services and so are completely unregulated. The Office of Fail Trading (OFT) issues guidelines to first and second line lenders. These guidelines must be adhered to or the lender will lose its licence. They concern a raft of items, however they specifically lay down a set of rules that are designed to protect the interests, livelihood and privacy of the borrower; for instance licensed lenders are prohibited from using unethical tactics to pursue debt arrears and are not permitted to charge unethical interest rates.

On the other hand the loan sharks operate with a completely free rein. Examples of this are interest rates and repayment terms. Loan sharks will often charge enormous rates of interest and offer loans on extremely bad terms for the borrower. Should the borrower fail to make scheduled repayments on the loan, the loan shark will often use extremely unethical tactics in order to get their money back. Often they will make further loans in order to enable the borrower to repay the first one. Gradually the borrower will become entrapped in a debt mountain with which they are unable to cope.

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