Scottish Illegal Money Lending Unit stress the dangers of borrowing from loan sharks over Christmas
The Scottish Illegal Money Lending Unit (SIMLU) are warning Scots to avoid borrowing from loan sharks this Christmas as they launch their winter campaign. As more people find themselves in financial difficulties due to the Covid-19 pandemic, illegal lenders may look to take advantage of those who are most vulnerable.
Illegal money lenders are increasingly moving online – new statistics show that, in the first half of the year, one in five users of loan sharks discovered them on social media. Although these loans may be seen as providing a quick solution for those in crisis situations, lenders who advertise through social media may not be authorised by the Financial Conduct Authority and could charge huge interest rates. On average, loans from illegal lenders end up costing three times as much as a legal loan.
Fiona Richardson, Chief Officer at Trading Standards Scotland said:
“The Christmas period can be a time when we feel pressured to spend a lot of money. This year, many people may find that they have less money than usual due to the impact of the Covid-19 pandemic. People may also find it more difficult to borrow money – either because their work situation has changed or because lenders are simply lending less.
“We want to stress the dangers of borrowing from unauthorised or informal lenders. It may seem like a quick and easy way to get some money and borrowers may intend to repay the money quickly; however, people can find themselves trapped in a cycle of mounting debt, often with the lender intimidating, harassing and threatening them.
“Our advice is to never borrow from a loan shark, but if you have done or even if you are thinking about doing so, please come to us. We investigate people that lend in this way because they are breaking the law, but those who borrow from loan sharks have done nothing wrong. We can put you in touch with agencies who will be able to support you.”
To find out more about the work of the SIMLU and to find organisations who can provide support and advice to those in financial difficulties, visit our webpages or call our free and confidential helpline on 0800 074 0878. The helpline will remain open 24/7 throughout the festive period.