Beware of the new loan sharks

If you give someone a loan and the annual percentage rate (APR) includes the word thousand, you’re probably a shark. Whether the threat behind the loan comes from a thick-necked thug with a thirst for misery or a well-written lawyer’s letter with a hunger for the same thing, the trap you’ve laid is identical. People borrow money because they have none right now and little prospect of enough in the near future, a problem the loan won’t solve. That interest is a hook, and the worst thing that can happen to the lender is the debt being repaid on time. The intimidation is initially for show, to keep you on your toes, but once you’ve missed a payment and are caught in the net, it gets very real.

The classic loan shark has been around since the year dot, lending money that can’t possibly be repaid on time and making his or her profit from the exorbitant interest and penalties. The criminal world’s radar pings wildly at any sight of an exploitable industry. It’s always targeted that easy source of revenue and largely had the grace to keep its head down while doing so. In the last decade, a different sort of shark has hit the water, one with a veneer of legitimacy just thick enough to pass for a decent option.

Post-financial crash, we’ve had, in the UK, loan sharks advertising on television. Cheerful ads promising simple solutions to age-old problems. We’ve had loan sharks making donations to political parties and buying the ear of powerful friends. Instead of sending a bulky skinhead round to break your thumbs for failing to pay, one instead sends fake legal letters to lean on their borrowers. Public outcry has sent them slithering out of the shallows to the deep, but these companies are still there, APR’s pushed down from 5000 percent to 1200 percent, still presenting themselves as a clean way of making ends meet. Payday loans, or whatever other misleading title they hide behind, are not going away. They exist to serve an unfortunate demand, and the residue of respectability gained from television advertising will always present them as a more high-profile and convenient option than the likes of credit unions.

Beware of the new loan sharksThere’s a cliché of the criminal craving the respect that an honest business would bring. Probably exaggerated, but it has a kernel of truth. Every criminal needs a legitimate business to explain earnings. Something with a high turnover of customers is good: high movement of cash in and out, irregular numbers week to week. Lots of little nooks to hide money in there. The more payday lenders ooze through the cracks between legality and common decency, the easier money lending becomes to hide behind. In a country with an addiction to austerity, there isn’t likely to be a change on the horizon. Lending is an industry well equipped to attract big criminals and little ones, too.

That was the draw in writing a book that centered on money lending and debt collecting. Organized crime is a business. Money draws people in at every level, sometimes out of ignorance, often out of desperation. People flock to what looks like a good opportunity. The young are lured in by the promise of easy money for intimidating the vulnerable to pay endless interest and penalties, which keep them snagged on the shark’s tooth long after the original amount has been paid back. Money gives power, gives influence, gives so many of the things that the impressionable young chase down, no matter the dark alleys it leads into. Perfect fodder for criminals and crime writers alike.