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Illegal Money Lenders: Loan Sharks

Illegal Money Lenders: Loan Sharks

If you have bad credit and find yourself in need of a loan, it can be difficult to find a bank or mainstream lender that will approve your loan request.

There are loans available to people with bad credit, and low credit scores, and even no credit, but you need to know where to look, and what to look for.

At a time when you need a loan, it may be for an emergency such as a car repair, boiler repair, or any kind of financial emergency, being rejected for a loan, and then being approached by someone offering to help, places you in a vulnerable position.

If you feel you cannot get a loan anywhere else, you may be tempted to take the person up on their offer.

And today with the Internet and web sites, not all unscrupulous lenders stand on street corners looking shady; they can have web sites, and look legitimate.

The first thing you need to know and look for is if the lender is registered and authorised by the FCA/Financial Conduct Authority.

This is the regulatory body that regulates all things credit and lending. If a lender is not registered with the FCA, they are not legal to grant loans or extend credit in any manner.

Once in debt to a “loan shark” or illegal lender, due to the nature of the loan and the extremely high interest rates, it can be very difficult to break the cycle and get out of debt.

And loan sharking and illegal money lending is still going on and happening. Unfortunately as long as there are vulnerable people in need of loans, there will be those who exploit this.

Legal Loan Sharks

For a time, many people felt that payday loans were “legal loan sharks” due to the high interest rates they charged. Some charged 1500% to over 2000% APR/annual percentage rate.

The reason why these APR’s seem as staggeringly high as they do is that payday loans are a short-term loan meant to be repaid within 30 days or less. By expressing the interest rates as an APR, for a 12 month period, the rates seem higher.

Payday loans catered to someone who was working had a wage, and also a bank account.

However, some payday lenders were a bit aggressive in their collection practices, and also kept borrowers in perpetual debt due to rolling over the loans.

Once the FCA capped the interest rates and times a payday loan could be rolled over, many payday lenders went out of business, including the largest payday lender, Wonga.

Guarantor Loans as an Alternative

As an alternative to taking out a payday loan, and also avoiding loan sharks, one option is a guarantor loan.

Guarantor loans are loans that are granted and based on affordability, and the fact the borrower has a guarantor for the loan.

These loans are for larger amounts and also longer terms than a payday loan, which makes them easier to repay and the monthly payments more affordable. In addition, the interest rates are much lower.

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<strong>What is Our Criteria For Applying?</strong> 
Every lender on our website has their own specific criteria by the basics are mentioned below and you must have a guarantor to be eligible. Simply select the lender of your choice and you will be taken directly to their website where you can apply. You will be required to submit your details including:<li style=”text-align: center;” data-mce-style=”text-align: center;”>Name (must be over 18 as the borrow, 21 or 25 as the guarantor)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Residence (your chances will improve if your guarantor is a homeowner)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Employment status (must be employed or on a pension)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Income (earning at least £600 per month and able to make repayments)</li><br /><li style=”text-align: center;” data-mce-style=”text-align: center;”>Monthly expenses (not have too many loans open or in major debt)</li>
 
You will then be asked to include the details of your guarantor and as mentioned above, this is usually someone who you know and trust and wants to help you with your personal finances. Ideally, a guarantor with good credit will maximise your chances of being approved based on the idea of ‘if someone with good credit trusts you, well we can too.'<strong>How Much Can I Borrow From Guarantor Loans?</strong>Guarantor Loans gives applicants the chance to borrow £500 to £15,000 depending on the lender. Some lenders we feature like Buddy Loans only have a maximum loan value of £7,500 and TFS Loans is the only lender that stretches up to £15,000.Factors that can influence the amount you can borrow revolve around having a good guarantor. One that is a homeowner, with solid employment, income and good credit rating will maximise your chances of borrowing the largest drawdown possible.The lenders featured on Guarantor Loans see a homeowner as someone who has already gone through the rigorous process of credit checking and affordability and if they can afford a house, they should be able to act as a guarantor for you.By comparison, having a guarantor that is not a homeowner offers slightly less security and means that amount you can borrow is slightly less too.Higher amounts may be available to those who already have a better than average credit rating, are homeowners themselves and a repeat customer with the lender who has already paid their loan on time. To apply directly with your lender of choice see <a href=”https://www.paydaybadcredit.co.uk/direct-lender/” data-mce-href=”https://www.paydaybadcredit.co.uk/direct-lender/”>direct lenders</a>.<strong>What Does The Guarantor Have To Do?</strong>Upon completing an application, the lender will typically send you a <a href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html” data-mce-href=”https://www.handbook.fca.org.uk/handbook/CONC/4/2.html”>pre-contract loan agreement</a> and SECCI (Standard European Consumer Credit Information form) which will highlight the terms of your loan. You and your guarantor will be required to review the terms of the loan, including the loan drawdown, fees, repayment dates and responsibilities – and this can be signed via an online verification process using your email and mobile phone.The lender will usually carry out an individual phone call with you and your guarantor to ensure that you both understand the responsibilities and what is required of you – notably that if you cannot make repayment, your guarantor will be required to pay on your behalf. Further to some additional credit and affordability checks, funds can typically be transferred within 24 to 48 hours (or sometimes on the same day).<strong>Are Guarantor Loans Available For Bad Credit Customers?</strong>Yes, even if you have a history of adverse credit, <a href=”https://www.gov.uk/county-court-judgments-ccj-for-debt” data-mce-href=”https://www.gov.uk/county-court-judgments-ccj-for-debt”>CCJs</a>, bankruptcy or IVAs several years ago, you can still be eligible. The idea is that you are using your guarantor and their financial history to ‘back you up’ and give your loan extra security. However, it is noted that your guarantor should have a good credit score and consent to co-signing your loan agreement.<strong>How Soon Can I Receive Funds?</strong>Guarantor Loans works with lenders that can facilitate funds within 24 to 48 hours of approval, or sometimes on the same day.When your funds are successfully transferred, most lenders working with Guarantor Loans will send the full amount to the guarantor’s debit account first. This is a standard security measure carried out by lenders to ensure that the funds are going to the right person and confirms the involvement of the guarantor. The guarantor usually has a ‘two week cooling off period’ where they can decide to pass on the money to the main borrower or they can change their mind and return the funds with no extra charges.