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Every year, vulnerable people across the UK fall into debt with loan sharks – recent data shows that up to three million people have turned to illegal lenders in the last year alone.
In many cases, people do not sign the documents and end up paying the price. Some end up paying much higher interest than agreed, in addition to facing intimidation, threats and violence.
Below, Katie (whose name we have changed) tells her story and how she now lives in fear of the person she borrowed money from.
Lasting impact: Katie and her son experienced mental health issues after borrowing money from a loan shark (file image, posed by model)
“It destroyed my life,” Katie says. “That’s the only way to describe it.”
‘These people are not who they say they are. He hid his true nature. He pretended to be a respectful man who was there to help, as long as I returned the money when I said I would.
He said there wouldn’t be any problem and that he wouldn’t harass me, he said he didn’t believe in that.
“After a few days, I was totally different.”
Katie had borrowed £1,000 from the moneylender to pay for Christmas, but ended up paying back more than £3,500 over the course of four months.
After going through a breakup and subsequent mental health issues, Katie lost her job as a support worker and found herself struggling to make ends meet.
“Christmas was coming up and, like any other parent, I was thinking, ‘What am I going to do?'” she said.
A friend recommended a local lender who she claimed could lend her money within 24 hours. Since she hadn’t been able to get a loan anywhere else and didn’t have many family members to turn to, Katie thought it was the only option.
There are many mothers who will try to save Christmas or a birthday and do what I did without realizing the detrimental effect it will have on their child.
Virraj Jatania is the CEO of Pockit, a company that offers a range of digital banking services, including prepaid cards. These are typically used for everyday expenses by those with poor credit and who might have difficulty opening a current account at a traditional bank.
She says Katie’s situation is common: “When society’s most vulnerable people are excluded from the financial system, desperation can drive them into the hands of dangerous loan sharks, putting them at risk of intimidation and violence.”
Just days after borrowing the money, the lender turned up at Katie’s door and told her the repayments were £60 a week, rather than £60 a month as she had previously been told.
She says: “I couldn’t do it, I wasn’t in a position to do it. I told him he’d lied – I’d had the messages showing it was £60 a month. He denied it and said there was a typo and it should say it was weekly.”
When she could no longer pay the loan, the loan shark threatened her.
“He would show up at my door first thing in the morning when I was taking my son to school and confront me, or at night when I was getting into bed,” Katie says.
‘He would send nasty letters to my door and kick the door or bang on the windows until I responded.
“The situation was getting worse every week, more and more.”
Eventually, Katie left home. “As a mother and as a human being, I wasn’t sure I could handle what happened to me any longer,” she said.
“I had suffered from mental health problems before, but never to this level. I was distressed, there was no way out, he harassed me every day.”
The moneylender was jailed after Katie spoke out, and was found to have committed violence against several women he had lent money to.
As a result of the trauma caused by the threats she received, Katie was committed under the Mental Health Act and spent time in hospital. Her son, now 11, is still receiving intensive therapy due to the experience.
“To this day, it’s left me in a very difficult situation,” Katie told This is Money. “I still don’t like being out there. (The loan shark) knows it was me who spoke up, so I’ll spend the rest of my life living in fear.”
“I don’t want to look back in ten years and think, ‘Why did I let this ruin such a huge part of my life and my son’s life?'”
Illegal money lending on the rise
As the cost of living has become increasingly difficult to cope with, illegal lenders have been able to thrive on those in need of cash.
“A 2023 survey found that more than three million people in the UK had borrowed money from illegal lenders in the past three years,” says Jatania.
“No one should have to resort to this just to make ends meet. The new government must prioritise the fight against illegal loan sharks and move forward with its commitment to implement a financial inclusion strategy that ensures everyone has access to credit and other vital services in a safe and regulated manner.”
The experience with the moneylender has deeply affected Katie’s life, as well as that of her son, but the importance of raising awareness about illegal moneylending outweighs this, she says.
‘There are many mothers who will try to save Christmas or a birthday and do what I did without realising the detrimental effect it will have on their child.
“As a father, I want to be able to give my son that Christmas, but I would rather have saved his mental health and protected him than saved Christmas. Christmas will be back soon.
“I relive it every time I talk about it, but if it means I’m going to save or educate just one person, then I would do it every day.”
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