Loan Shark Guide

Things to Beware of When in Financial Difficulties
By Stephen Calreve

Are YOU (or someone you know) in financial difficulties?

Do you owe money you currently can't afford to repay?

Are you looking for a "quick fix" to sort it out? Well Beware!

There are quick ways to solve these issues but in the long run some of them can leave you much worse off than you are right now!

There are a few ways of getting out of financial trouble including:-

-Taking out a loan of some sort.
-Selling something to raise the money you need to pay off the debt.
-Working longer hours / overtime if possible.
-Borrowing money from friends / family.

But which of these should you really consider? Let's take a look at them in closer detail.

Firstly - Borrowing from friends & family.
This can be just about the hardest one to do, as asking friends / family can be very awkward & difficult, but if you can get up the courage (and if they afford to help out) this is almost always the cheapest option, even if you pay them some extra back as interest. But beware, this can also be the cause of family rifts and loss of friendships.

As with all loans, you must ensure you pay them back in the agreed time period (even if you borrow off someone else to pay back the initial loan.)

Secondly - Working longer hours / overtime.
This is a very good one too and can be simpler as everyone gains.

The company you work for gets more work done and you earn some extra money, but in these times of recession the number of us who are getting into debt and are actually working is decreasing rapidly, so, for many people, this will not even be an option. But if it is, make the most of it. Work more than you need to pay back the debts and get yourself a little "nest egg" built up and save it for times of trouble.

If you aren't working, try and get a casual job. These may not pay much (an of course you have to beware of working more hours or earning more than the DSS allows if you're on benefits) but every penny helps to pay off the debts.

Thirdly - Selling or Pawning something to raise money.
If you have items that you no longer use (especially electrical items, jewellery, etc) that are in good condition and aren't too old you might be able to sell these in order to raise the money needed.

The flip side off this is taking them to a "pawnbroker" type shop of which there are more and more these days. These places allow you to hand over items of value (and that doesn't mean gold & diamonds, though they're quite happy to take these off your hands too) and they will give you a period of time to come back and pay back the money they gave you + interest and have your goods back.But if you don't come back in the agreed time they are then at liberty to sell your items and keep the money.

EG if you take in a TV worth ?600 they might give you ?300 and agree to hold it for 2 months at an interest rate of 5% per month non-accumulating. So... if you go back after 1 month to reclaim your TV you would pay them ?330. If you went back after 2 months you'd pay them ?360. If after 2 months you haven't been back they could sell it for anything they like and your TV is gone. However, if you go back before the 2 months is up they might agree to hold it longer but this is totally at their discretion and they might increase the interest rate.

Fourthly - Loan companies who seem to be legitimate just because they advertise on the TV or in papers / magazines
These can seem like a good thing especially with some of the figures they advertise, EG borrow ?70 for one week and pay back just ?77. but I have noticed their APR rates, these are the rates of interest per year that you pay and some of them are over 2300% this means that if you were to borrow ?1 for a year you would have to pay back ?230, now compare that to bank loans which can offer less than 10% APR (if you can get one) or even credit cards, many of which offer a period of 0% interest and then still come in somewhere around 30% APR and you can see just how poor some companies rates are. So maybe they aren't so good for you after all.

Fifthly - Private loans
These are generally referred to as "loansharks" and I'm sure you've heard enough horror stories about them yourself that I need say nothing except avoid at all costs!

Go to the Citizen's Advice Bureau (CAB) office in your local town and ask for their help and advice. It MAY end up that they can't offer anything new, but they may know of something that you haven't tried.

Obviously the best thing is not to get into debt in the first place, but that is so much easier to say than to do. You may have a decent job earning good money so you go out and buy a newer car on credit and then lose the job. You now can't afford to make the payments on the car and you just try selling it for enough to pay off the rest of the debt!

So what do you do? How can you help avoid this situation?

Well, always try to pay cash for whatever you're buying, rather than taking credit or getting a loan. Sometimes you'll even be able to get a better deal because you're paying cash and so you either get the item cheaper or get extras (that are actually worth something and that you'd actually want) thrown in free.

If you can't afford to pay cash, try and wait until you can. I know that sometimes this isn't possible, but how many times do we persuade ourselves that we just must have that thing now, right now! When really, we could wait a bit, save up the money and get it credit free? (and maybe even cheaper because of paying cash?)

For more Information please visit Please DO NOT BE PUT OFF by the fact that this section starts off with advice for businesses, continue on down the page and look at the other various links. I'm sure there will be something there to help or at least give inspiration.

For tips and advice on a wide range of subjects please take a look at

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