How easy is it to fall victim to loan sharks?

RHemmings

I've seen a lot of TV programs and newspaper articles mentioning this loanshark, or that loanshark, and I wonder how people end up in that position. If someone tried to lend me money in a pub with hundreds of percent APR, I'd run a mile. If I had less money than I do, I'd run further. But why do people go for it?

I remember a television program showing how a woman on benefits was paying for a holiday by borrowing the money from a loanshark. The interest was so high, that she ended up paying three times the cost of the holiday. I couldn't understand why she didn't forgoe the holiday one year, and then for every year thereafter they'd have three holidays for the same cost. Why don't they do this?

nomoneytoday

Because some people live in a culture of "must have it now" and cannot save for their future.

Mark7799

Or they think they 'have' to keep up with friends/neighbours despite the possibility of
1. The friends/neighbours may be earning three times as much as them
2. The friends/neighbours are also heavily in debt to their eyeballs!

SunnyBunny

It is easy for vulnerable people or the financially unsavvy to fall prey to these low life money lenders.

An example of this was a relative of mine. Over 15 years ago (although I think it still happens) door step money lenders were in operation. My relative, a person not extravagent, or a drinker or smoker, and completely clueless when it came to money, took out a "loan" for £50, and immediately owed £99, which was to be paid off weekly by, say, £5 or £10. Then as the loan grew smaller, they would be offered another at the same huge interest rate. When I found out, and confronted the lowlife person, the amount my relative owed was about £220 - I said that I would payoff the loan in cash and I wanted the lowlife to sign that the account was paid in full. At this stage the lowlife looked sheepish, there was another loan of £99, with about £60 outstanding that my embarassed relative had asked him not to mention. I think the rage and contempt I felt showed on my face - as I handed over another £60 with a warning to the lowlife never to darken the door again!

I post this really to just offer some small understanding that not all victims are keeping up with the Joneses. Knowing my relative they probably didn't even spend the money on themselves.

SB

If someone on benefits gets a large bill and cannot pay, they may not be savvy enough to contact the utility company or just frightened - enter the loan sharks.

belleooo

SunnyBunny wrote:

It is easy for vulnerable people or the financially unsavvy to fall prey to these low life money lenders.

An example of this was a relative of mine. Over 15 years ago (although I think it still happens) door step money lenders were in operation. My relative, a person not extravagent, or a drinker or smoker, and completely clueless when it came to money, took out a "loan" for £50, and immediately owed £99, which was to be paid off weekly by, say, £5 or £10. Then as the loan grew smaller, they would be offered another at the same huge interest rate. When I found out, and confronted the lowlife person, the amount my relative owed was about £220 - I said that I would payoff the loan in cash and I wanted the lowlife to sign that the account was paid in full. At this stage the lowlife looked sheepish, there was another loan of £99, with about £60 outstanding that my embarassed relative had asked him not to mention. I think the rage and contempt I felt showed on my face - as I handed over another £60 with a warning to the lowlife never to darken the door again!

I post this really to just offer some small understanding that not all victims are keeping up with the Joneses. Knowing my relative they probably didn't even spend the money on themselves.

SB

If someone on benefits gets a large bill and cannot pay, they may not be savvy enough to contact the utility company or just frightened - enter the loan sharks.

We have a firm that operates like this in the council estate next to where I live and my cousin found herself in a similar situation as your relative. These people are scum but are allowed to operate legally. I would love to name and shame this particular setup but knowing my luck they will read the boards and I would be done for slander or something.

SunnyBunny

I seem to remember a leaflet landing on my doormat, company name had some to do with "provident" - however I know that is a commonly used word with totally legit. companies. I sent the leaflet to our local credit union - which is totally designed for people to lend at a low rate or for those that live/work/study in the area to save with. I think one of the good things to counteract the loan sharks is to tell people about local credit unions (where they exist). Not only for those that need to borrow but for those that would like to save, receive interest and benefit their community - you can even volunteer. Guilty me - I should practice what I preach - I have not done supported my local union but I intend to.
SB

RHemmings

SunnyBunny wrote:

I seem to remember a leaflet landing on my doormat, company name had some to do with "provident" - however I know that is a commonly used word with totally legit. companies. I sent the leaflet to our local credit union - which is totally designed for people to lend at a low rate or for those that live/work/study in the area to save with. I think one of the good things to counteract the loan sharks is to tell people about local credit unions (where they exist). Not only for those that need to borrow but for those that would like to save, receive interest and benefit their community - you can even volunteer. Guilty me - I should practice what I preach - I have not done supported my local union but I intend to.
SB

Where can I learn more about credit unions? In considerable detail. I could put money into CUs, but would want to know an awful lot more about them, the potential pitfalls, etc., first.

SunnyBunny

No great info on this but I feel I started this so should reply. The credit union in my area was mentioned in the local freebie newspaper. S'pose you could google, if there is one in your area it will be called Areaname Credit Union so not difficult to find. But realistically you may get a lower return on your cash that a mainstream building soc. My reservation on depositing any cash was that I wanted to ensure that the people running the CU were honest and capable, which I think they are, so I might just invest a small amount and see how it goes.
Good luck.
SB