Managing your finances as a student in London can be difficult and student loans are not always enough. This can make it tempting for students to look at other types of loans available, but not all these options are safe. In this blog post, we will aim to teach you about loan sharks, the different ways they can target students, and what you can do to protect yourself from loan sharks.
Some of you may have heard of the term “loan shark” before, but if you haven’t, a loan shark refers to someone who lends money without a license to do so. Anyone can be a loan shark. They may appear to be friendly at first, but they often charge extremely high-interest rates and borrowing from a loan shark comes with risks. Along with high-interest rates, you may experience threats of violence if your repayments are late. This can pressure some individuals into taking out a second loan to repay the first, meaning that they end up in a vicious cycle of debt.
Many students may be in a difficult financial situation. Paying rent and bills along with weekly shopping, course materials and trips can seem impossible. All of this can make some students turn to loan sharks out of desperation. Social media also plays a big part in loan sharks targeting young people. The most recent statistics show that out of all age groups, under 25s are most likely to encounter loan sharks via social media. For example, there have been cases of loan sharks joining university WhatsApp groups and reaching out to students, threatening to expose them on the group chat if they do not receive their payments on time. In addition, some loan sharks post online ads via Instagram, misleadingly mentioning false promises of easy money. Others have also been known to use Snapchat to advertise their illegal money-lending operations.
There are things you can do to protect yourself from loan sharks. Remember to spot the signs of an illegal money lender. These include no credit agreements or contracts, cash payments, no payment receipts, threats or violence and no flexibility when it comes to repayment dates. Don’t trust anyone unlicensed who offers to loan you large sums of money, even if they appear to be your friend. Additionally, be wary of anyone on social media who offers you money and don’t give any personal information, e.g., address and account details, to strangers online. If you are struggling financially, try to consider other more reputable sources of income. Some ideas include part-time jobs, scholarships, bursaries, hardship funds, setting up a student bank account to gain access to an interest-free overdraft, King’s Affordable Accommodation Scheme (KAAS) or selling unwanted textbooks. If you have tried the above and are still having issues, you can always contact the KCL Money & Housing Advice Service, either by calling their advice line or attending one of the weekly drop-ins on campus and they will be able to assist with any queries or worries.
Finally, if you do find yourself in the situation of owing money to a loan shark, remember you are not in trouble. It is the loan shark who has committed a crime. Don’t be afraid to ask for help. You can phone the Illegal Money Lending Team (IMLT) on 03005552222 and they can investigate and take action against the loan shark. So, the sooner you ask for help, the better.
Aanchal Raina
King’s Student Money Mentor
Part of Money & Housing Advice
The King’s Student Money Mentors blog shares our students’ personal experiences and thoughts on money-related topics. Any reference, opinions or recommendations on a particular company/brand are only the views of the student(s) who wrote the blog post. King’s College London, the Money & Housing Advice service and the Money Mentor project do not share the views in the blogs nor endorse any of the companies mentioned. Readers should conduct their own research before using any companies mentioned in our blog posts.