It’s the middle of January and Christmas is feeling like a distant memory. The decorations have been put away, Easter eggs are in the shops and the kids are probably already bored of the gifts that you saved hard to buy. On top of all that, the washing machine is on the blink and the electricity bill has just arrived! It can seem overwhelming, and you might not know which way to turn.
You could borrow some money to tide you over, but if you’re on a low income or have a poor credit rating, it’s not that easy. Borrowing from an illegal money lender, or loan shark, might seem like an easy option to help you get through January, but don’t be hasty, unsecured and pay day loans can get you deeper into debt.
What is a loan shark?
Loan sharks are unlicensed money lenders who charge very high interest rates. They often use illegal methods to get their money back, such as threatening violence or taking away your credit cards or valuables until you can pay them back. Because loan sharks lend money illegally, borrowers are not protected by a code of conduct.
Illegal lenders or loan sharks have been using the cost-of-living crisis to target vulnerable people and make themselves richer. The Centre for Social Justice describes illegal lending.
Illegal lending exists in many forms, from small-scale lenders who pester their victims into repayment to violent predators and organised crime groups.
Some loan sharks might even advertise themselves as ‘companies’ or get you sign legitimate looking contracts. You can check if a company is authorised to lend money on the government website .
To find out more about loan sharks visit the Stop Loan Sharks website.
What can you do if you have borrowed money from a loan shark?
Contact Stop Loan Sharks, they investigate and prosecute illegal money lenders and provide support to borrowers.
If you have borrowed from a loan shark or you are worried about someone else who has, Stop Loan Sharks can help by giving you emotional and practical support. Safely and anonymously report a loan shark.
What is a payday loan and will it really help?
OK so it’s true; some doorstep or mobile lenders are not loan sharks, they are licenced by the Financial Conduct Authority.
Payday loans might seem like an easy solution to paying for that broken washing machine or clearing a debt and although many of the loans on offer are legitimate, they can still get you deeper into debt because of the high interest rates they charge.
What can you do instead of borrowing from an illegal lender?
- Talk to someone: Get free and independent debt advice. You might feel like you don’t want to talk about it, but getting help to manage your debts can make you feel a lot better, and help you take back control of your finances. You don’t need to pay for debt advice. Don’t borrow more money if you’re struggling to pay your debts; instead, get free advice and get back on track.
- Check your getting everything you’re entitled to: It’s a good idea to check that you are getting all the help you’re entitled to, things like benefits and money to cover food or essential items. You may qualify for the Winter Fuel Payment scheme which can help you manage energy price rises in the colder months. Take a look at our cost of living hub, where you can find help with money matters, benefit checkers, advice on keeping energy bills down and debt advice. You’ll find more information about benefits and support here too.
Get help with your bills
If your winter energy bill has arrived and you are struggling to pay it, get in touch with your energy provider to talk about your options. Many utility companies can help if you find yourself struggling with arrears.
For example; Southern Water have a hardship fund for customers with money troubles. If you are experiencing significant financial hardship, or challenging personal circumstances, like a serious illness, death in the family or sudden job loss, you could qualify for one of their three schemes:
- A one-off bill reduction (of up to 50%)
- A debt write-off (of up to £2,000)
- A grant for specific home improvements, including white goods like washing machines, fridges etc. and repairs (of up to £1,000)
British Gas Energy Trust offers grants to people who get into arrears because of serious illness or major life events and it doesn’t matter which energy company you are with.
You’ll also find a wide range of information that can help if you’re finding it difficult to pay your bills
- National debt charity Step Change
- Citizens Advice
- Local and national advice on our Cost of living hub
If you still need to borrow, there are alternatives.
If you still need to borrow money then a better option might be from a community bank or credit union.
- Credit unions – can help you save money as well as offer low cost loans and they’ll consider applications from people with poor credit ratings. Visit the Wessex Community Bank to find out more.
- Lending schemes through your employer – If you are employed talk to your HR department and ask if they can offer any short-term help, such as an advance on your wages or a bit of overtime, instead of borrowing from elsewhere.
Mental health support if you’re worrying about money
If worrying about money is affecting your mental wellbeing, there are local services that can give you help and support.
The mental health charity Mind also has helpful tips and information about how to manage anxiety around bills, organise your finances and understand your money and mood patterns.