Alternatives that you may be offered are:

Cash Loans or Doorstep Loans

These are short term loans, generally for small amounts £50 - £500 that are delivered to your door and the repayments are collected in the same way. The collectors are always very friendly and the arrangement feels very informal. The bad news is this is a VERY expensive way to borrow money. Doorstep lenders (home credit agents) are generally licensed (a credit licence) and are operating legally but that doesn’t make them a good choice!

The table below shows the cost of a £300 loan from a typical doorstep lender:

Amount
of Loan		 Term of Loan Weekly Repayment Typical APR Total Interest charge Total that you will have to pay
£300 52 Weeks £10.50 272.2% £246.00 £546

Illegal money lenders

They are unlicensed (lending without a credit licence) and operate outside the law. They are commonly referred to as loan sharks. These loan sharks take advantage of vulnerable borrowers, (people who can’t get money from anywhere else).

The government has a loan shark hotline for people to report loan sharks operating in their communities. To report a loan shark in confidence:

Phone: 0300 555 2222 (local call rate including mobiles)

Text: loan shark and your message to 60003

Email: send an email message to: reportaloanshark@stoploansharks.gov.uk

They rarely give any paperwork to the people they've loaned money to, making it very difficult to keep track of how much is owed.

  • If payments are missed, they often use threats and violence to get more money.
  • They charge extremely high rates of interest and also add other 'charges' to loans whenever they want.

This table shows the cost of a £300 loan from a typical loan shark:

Amount
of Loan		 Term of Loan Weekly Repayment Typical APR Total Interest charge Total that you will have to pay
£300 52 Weeks £10.50 1000% £2700.32 £3000.32

 

Before accepting any loan, always ask for a clear explanation in writing of the interest rate and how much in total you will have to pay back.

Never take out a loan unless you are sure you will be able to pay it back.