What are loan sharks?

Loan sharks are unlicensed lenders, they operate illegally and as a result avoid the regulation that governs the financial industry.

They target the financially vulnerable and charge very high rates of interest.  The borrower does not have the protection of a contract or terms and conditions. 

Mainstream banks and other lenders typically charge interest rates of between 5% and 17% a year whilst the loan sharks charge as much as 1000%.

People who are refused credit from banks and credit cards often find themselves with nowhere to turn. In those instances it can be tempting to approach rogue lenders or loan sharks, but this is highly risky, if not dangerous. The lobbying group Debt on our Doorsteps estimates that as many as 7m people in the UK are forced to use loan sharks because they can't find credit elsewhere.

Quite often if you fail to meet repayments or agree to their demands they will often use intimidation and threats of violence to extort large sums of money from you.


It might appear there are no alternatives to loan sharks - but there are. There are some regulated mainstream lenders who will lend to people with a bad credit history or individuals refused elsewhere.  Some firms specialise in lending to people with a poor credit rating. Also check see if there are any Credit Unions established in your area.

Credit Unions

Credit Unions are owned and are controlled by their members who pool savings to offer loans to members at low rates of interest.

Each Credit Union has a 'common bond' which determines who can join it. The common bond may be for people living or working in the same area, people working for the same employer or people who belong to the same association, such as a church or trade union.

Credit Unions are also known as 'people's banks', and are growing in popularity amongst those who have been refused credit elsewhere. 

Debt Problems / Advice

If you are experiencing financial difficulties it is always worth seeking advice. The Citizens Advice Bureau for instance provides free and impartial advice.

Useful websites

Citizens Advice Bureau

Consumer Credit Counselling Service - The Consumer Credit Counselling Service is a registered charity whose purpose is to assist people who are in financial difficulty by providing free, independent, impartial and realistic advice.

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