The current Coronation Street storyline, involving Tyrone and Fiz, brings into sharp focus the risk of using illegal money lenders. By borrowing from illegal money lenders the amount you owe can escalate quickly and leave people struggling to manage.
There are alternatives, which are used by millions of people excluded from traditional sources of credit to give them a leg up if they need it. Up and down the country from Portsmouth to Aberdeen, people from all walks of life choose a range of products to manage their finances and short-term lending is just one of them.
Short-term money lenders provide flexible small loans for those unexpected bills, emergency shortfalls, or just a small cash injection for those who do not want to enter into a long-term financial commitment. They are only intended to cover temporary shortfalls and should not be viewed as part of a long term financial solution.
All CFA members are regulated by the Financial Conduct Authority and adhere to a strict set of rules. Unlike illegal money lenders our members carry out stringent checks to ensure the customer has the means to pay the loan back. In addition, from the outset it is made clear and transparent how much the customer is borrowing and how much they will need to pay back. The amount of interest you pay back will never be more than the original amount you borrowed and the fees are capped to give you reassurance.
If you do experience difficulty in making payments, our members will work with you to ensure you can manage your finances and if necessary direct you to other sources of financial advice. Unlike criminal illegal money lenders who are more inclined to resort to violence and intimidation to recover their loan.
This knowledge and clear information gives the customer the ability to make the right choice for them. Short-term lending is not suitable for everyone, but they provide access to the credit market for some people who may not be able to borrow because of a limited credit history or find this product suits their needs. It is important to understand that millions of people use short-term lending responsibly each year for a variety of reasons without getting into financial difficulty. This market exists to give people the choice to decide how they manage their finances or to cope with that unexpected bill.
Tyrone's situation in Coronation Street should serve as warning to anyone considering using an illegal money lender. These individuals can resort to intimidation and violence to get their money back. You could end up paying back your loan many times over and evidence suggests it can have a detrimental impact on your health and wellbeing.
The risk of using unregulated lenders and loan sharks is clear. If you are considering taking out a short-term loan visit the Consumer Finance Association or the Financial Conduct Authority website to find an authorised lender.
This view is backed up by the Illegal Money Lending Team who are at the front line and see the distress loan sharks cause.
Tony Quigley head of the Illegal Money Lending Team said:
Loan sharks are a scourge on our communities and should never be used. They often pray on the most disadvantaged in society, causing devastating problems and tearing their lives apart. It is a despicable crime and we will continue our work to combat illegal money lending. We would urge anyone with information about loan sharking or victims of loan sharks to contact the team on 0300 555 2222.
If you are in difficulties with any aspect of your finances visit the Money Advice Service for impartial advice.