Illegal lending on the rise - what safer options are available?

A record number of households are turning to loan sharks to make ends meet, new figures have revealed.

According to the Centre for Social Justice (CSJ), more than 1.7m people in England and over 2m across the UK are now borrowing from unscrupulous money lenders.

That’s an increase of half a million since 2022.

Why are people turning to loan sharks?

Many people are turning to loan sharks to cover essential costs like household bills and groceries.

But some are also using money from loan sharks to:

• support family members
• pay for funerals and weddings
• pay for vehicle repairs
• meet business expenses

Meanwhile, some said they turned to illegal lenders because they thought they couldn’t access regulated credit or believed they’d be rejected.

In fact, almost three-quarters of those who sought alternative credit had been turned down by regulated lenders.

Stereotype of loan sharks doesn’t reflect reality

Many of us have an idea in our mind about what an illegal lender looks like.

But the CSJ believes the “traditional image of the violent, anonymous loan shark” isn’t actually true.

Between 2022 and 2025, two-thirds (66%) of victims met their loan shark through friends or family.

Meanwhile, a similar number (60%) regarded the lender as a friend before borrowing.

Figures also show that 3.7% of people surveyed are currently borrowing from someone local who charged interest but wasn’t a legitimate lender.

What can be done to tackle illegal money lending?

The CSJ has called for action to be taken to address illegal lending, such as stronger enforcement and improving access to safer and affordable credit.

Head of welfare Ben Gregg stressed that none of its recommendations would be costly, but said they’d be “life-changing” for those affected.

“Hundreds of thousands of people are borrowing from illegal lenders, often with little to no idea that their creditor is acting illegally,” he commented.

“Many consider unlicensed lenders to be friends and members of their community and continue to repay their debts even after loan sharks have been arrested.”

How to report a loan shark

Reporting a loan shark can feel frightening, especially if you are worried about threats or intimidation. 

But there is specialist support available throughout the process.

You can report a loan shark online or you can call the illegal money lending team for your country:

• England - 0300 555 2222
• Wales - 0300 123 3311
• Scotland - 0141 2876 655

Are there any safe alternatives to loan sharks?

If you feel you’ve no option but to borrow from a loan shark, perhaps because you’re on a low income or have a poor credit score, remember there are other, safer alternatives:

• Credit unions - they offer manageable credit and consider applications from people with poor credit scores.
• Employer lending schemes - your employer may be able to offer short-term help e.g. an advance on your wages. Talk to the HR department.

Also, if your income is no longer stretching far enough to cover your outgoings, then please don’t hesitate to get in touch. 

We can help you check that you're claiming all the benefits you're entitled to, as well as support you in creating a realistic budget that works for your circumstances.