MONEY LENDER

Contents

Historical meaning

Contemporary meaning

Regulation

References

Historical meaning

The historic use of the term Money lender refers to a person who as charges a fee for the use of money (i.e. a usuror).

Contemporary meaning

The contemporary use of the term Money lender refers to a person or business organization that offers unsecured loans to individuals at rates that are far higher than market interest rates. Money lenders typically lend to individuals who would not qualify for loans from financial institutions such as banks or subprime lenders because their income is at or below the poverty threshold or because they have adverse credit scores. Money lenders provide an important source of credit by lending to individuals who would otherwise not have access to a bank or credit union, but since such borrowers are categorised as being at high risk of default, they charge high interest rates, and possibly up-front charges and collection fees. ^[1].

Regulation

Money lenders in the United Kingdom are regulated by the Office of Fair Trading, and must be licenced to lend money under the Consumer Credit Act 1974.
Money lenders who are unregulated, engage in predatory lending or seek to enforce loan agreements by illegal means such as extortion are commonly referred to as Loan sharks.

References

1. Moneylenders and their Customers (Rowlingson, Karen., The Policies Study Institute, London, 1994, ISBN 0-85374-654-0)