The police department in Gloucestershire, United Kingdom, has issued warnings to citizens living and working in that area about the prevalence of loan sharks operating in the area. A recent account from the city showed how one man came to the services of a loan shark and how he got out of it. To back up this story, police in the district stated that one in five households in some parts of Gloucestershire has borrowed money from unlicensed money lenders.
One man named Chris Stroud had to run away from his loan shark after not being able to make payments necessary to keep the loan up. He was already in debt with other, more traditional lenders such as banks and credit card companies and needed cash immediately. The money was going to be used to pay his tuition in order to get a better, higher-paid job in the future.
In order to secure financing, this man contacted a respectable looking lender out of the newspaper. Two representatives from the lending firm came to the man’s house to introduce him to the terms of the loan. The first impression was very good, so this man went ahead with the whole process. Even though the interest rate was very high, this man continued with the loan.
The officers working for the loan company promised that they would be able to help the man with his problems as far as financing his education. These words reflected soundly in the head of the man seeking a loan. However, when the man could not pay his first bill’s full amount, the situation quickly changed. The loan shark refused to accept a partial payment and demanded a full payment. When the man approached the company and asked to re-arrange the payment situation, his request was refused because of the agreement he had already signed.
In response, the man got very worried about his situation, as he was never sure what was going to happen. If the loan shark thought that payment was not going to be received, what would he do? The man claimed to have developed medical problems, partly due to the stress of the situation and partly due to the recreational drugs he was using.
In order to remedy the situation, the man approached the Citizens Advice Bureau, who helps people get out of their debt problems in a predictable, intelligent manner. The man had only borrowed £700, but had already paid back £1100 and still owed more. The total amount was likely around £1400 due to the high compounding interest on the loan. In the end, the man moved to a new address which was also quite difficult. The terrible credit rating which he had accumulated over the past few years was still following him, and finding a place to rent to him was difficult. He was seen as a risky client.
Looking back, the man from Gloucestershire believed he was getting the help he needed. However, the problems that the debt caused for him became larger than the original situation. The man’s judgment was clouded by the fact that he needed money and nothing else.