How to find a loan shark who is legitimate

How to find a loan shark who is legitimate

We all know what loan sharks are: people who get the most out of their borrowers by charging insanely high interest rates. However, our common misconceptions of loan sharks are those who lend money through illegal means. You need to know that a loan shark is anyone who lends money to other people privately. A number of these people actually practice their trade legally and in accordance with government laws and regulations. Thus, it is imperative for you as a borrower to discern the difference between the two. Hopefully this article will give you some insights on how to identify illegal sharks.

The first thing you have to know before you can identify loan sharks is to know the rate ceiling of your State. Understand that different States have different rate ceilings, and there are places where there are no such rate ceilings. If you know the rate ceiling, then anyone charging higher than the ceiling may be considered as a loan shark.

Another way is to ask the lender for the penalties that you will have in the event that you cannot pay your loan. If the penalty charged is higher than the State’s ordinance, then you are most likely dealing with a loan shark. If you experience some, reporting to the proper authorities is the best thing to do.

Loan sharks are typically infamous for offering payday loans. Payday loans are money that you can borrow to be paid on your next payday. It’s like getting your salary in advance, but with deductions. These deductions are the interest rates charged by these people or companies. What’s good about payday loans is that they can readily be approved without much requirements and without the need for credit checking. However, these payday loan charge a huge amount of interest that’s why a lot of borrowers refrain from applying for these type of loans. Thus, you as a borrower should know about the policy’s penalties, interest rates, and other matters before signing such loans.

Another thing that you need to know about payday loan companies is that a lot of them are operated and controlled by the government. This move is done in order to prevent them from charging unreasonably high rates. However, there are still those who charge as much as 700% of the borrowed money as interest rate, usually from the small loans that they lend. They justify this high interest rate by saying that they provide more convenient services that you cannot hope to do from transacting in banks and other government agencies. However, aside from their high interest rate, they also ask you to pay the loan immediately, usually from two weeks to two months after lending the money. In this case, it’s contradicting its high interest rate because of the short amount of time that you need to pay for the loan, as opposed to banks that let you pay them at a longer period of time.

Take note that all these lenders operating in accordance with the government’s rules and regulations have a license to operate. Thus, if they are not able to show you a license, it only means that they are operating illegally. This is also another way to know if you are dealing with an illegal loan shark.

how to borrow money from a loan shark

If you are in dire need of money or other financial assistance, go to a company that is operating legally. It not only ensures that you are transacting properly, it also lessens threats that you receive when you transact with an illegal loan shark. Don’t risk your life with fast and easy money that illegal loan sharks offer for they will haunt you until you settle your debt to them, and most of the time, it’s not worth it.