As stated earlier, loan shark is an unlicensed moneylender. So who are licensed money lenders? The licensed money lenders should follow the FCA (Financial Conduct Authority) code practices and they are regulated by FCA. In the case of a loan shark, as they are unlicensed, they work outside the law. The loan they are issuing to you will be a bad credit loan. Some of the characteristics of loans you’ll gain from them are loans with a very high interest rate, very bad terms will be applied when taking the loan, they will harass you if you get late in repayments and also you will be pressured by them to borrow more as they need you to repay more debts.
So, what you need to do if you have taken unsecured loans for bad credit by a loan shark? If you are a person who has borrowed from a loan shark, there will be no legal obligation for your loan repayment. The action you can take if you get caught to a loan shark is contacting the local trading standards office or 0300 123 6262. They can support you in this situation.
Another problem associated with the loan sharks is whether it is a crime not to repay a loan shark. As these loan sharks are not licensed by FCA, they do not have any legal right to recover the debt. But these people often frighten and threaten people saying that they can put people in prison too. Now it is evident that if the loan is not repaid to a loan shark, it is not a crime.
So the best advice you can keep in mind is always go to a lender who is licensed under FCA. Those lenders are reputable and they will also consider giving loan for people with bad credit and a low income. And if you need a small amount of money for a shorter period, they can also help you. But still you will have to pay a higher interest rate and your loan agreement will be covered according to the Consumer Credit Act.
In a situation the people who have a low income needs a small loan amount for a shorter period, they can always borrow that from a credit union. The credit unions are organizations which encourages people to save money in the way they can also to borrow money in an amount they can afford. The interest you will have to pay is one percent for one month. So the interest for a loan of £100 will be £1 for a month.