Loan scams - bogus loans, loan sharks and payday loans

There are many loan companies which are not legitimate and can ultimately leave you in a worse financial position.

There are different types of illegitimate loan companies such as:

• bogus loan companies
• loan sharks
• payday loans

Bogus loans

Bogus loan companies and fake credit brokers often target those with poor credit ratings. People who apply for the loan are told to pay an upfront fee. Once this fee has been paid, the promised loan never materialises and the fraudster keeps the cash and is never heard from again.

Read more information on loan scams

Report a loan fraud

Report a bogus loan

Alternatively, you can call Action Fraud on 0300 123 2040 .

If you require advice, please contact the Trading Standards team.

Tips to protect yourself against loan scams

• be on your guard and be suspicious if companies offer quick and easy cash regardless of credit history
• avoid loan companies who cold-call you
• do your homework on the company before agreeing to anything - some credit fraudsters quote the consumer credit licence numbers and company registration numbers of other lenders so if the details don't add up, don't make any payment

Loan sharks

A loan shark is someone who lends money to people without the required licence issued by the Financial Conduct Authority.

Read more information about loan sharks and their tactics

If you are able to answer yes to any of the questions below then you may have been in contact with a loan shark:

• have you been offered a cash loan?
• have you been threatened when you couldn't pay?
• has your bank card been taken from you as a security?
• does what you owe keep growing even though you are making payments?

Report a loan shark

Report a loan shark to the Illegal Money Lending Team

When you report the loan shark, it will be confidential and you can report anonymously.

For more advice, you can contact the Trading Standards team.  

How to check a lender

You can use the Consumer Credit Public Register to check lenders or call 020 7211 8608.

The register shows

• everyone with a licence
• anyone who has applied for a licence
• anyone who has had a licence withdrawn or suspended
• information such as trading names and the activities for which a business is licensed

If a lender isn't listed as having a current credit licence, don’t borrow money from them.

Payday loans

Payday loans are small sums of money paid over a short period of time and are available from high street shops and internet sites. Lenders usually hold a Consumer Credit Licence but charge very high interest rates. 

Read a guidance on payday loans and learn how to make a complaint about a payday lender

If you decide to get a payday loan then make sure you shop around and are fully aware of all the charges before you borrow any money.

Alternative lenders

There may be other ways for you to resolve a short-term money problem including:

• loans from credit unions - for more information, see the Association of British Credit Unions (ABCUL) or the ACE Credit Union Services
• agreeing an overdraft with your bank
• if you have a low income and need money in an emergency you may be able to get a budgeting loan