Definition of a loan shark
A loan shark by definition is the person that illegally advances unsecured loans. They make such a loan at higher interest rates and they often offer such loans to vulnerable individuals. To recover their loans they will resort to blackmail or threat to violence. Such a lender is unlicensed and this means that his activities are illegal. Their victims are vulnerable people, because they will find it extremely difficult to borrow through legitimate financial means.
Usually, people opt for the loan sharks, because of the catches. These lenders as said are unlicensed and they are willing to offer cash loans to those who urgently need them. The major catch is that they offer the money when you need them. They usually offer loans on poor terms. Cases abound where people borrow a small amount of money only to repay triple that amount.
Loan sharks always calculate their interests based on the principal amount and because of the interest rates can go as much as 120 percent per month or 1440 percent per annum. It is always difficult to pay off such loan, and some of the borrowers can resort into hiding. These lenders will use illegal means to get their money. If you borrow from such lenders, you are putting yourself at risk of violence.
Loan shark lenders
These lenders will appear to be friendly when you borrow from them. When it reaches the time for repayment, they will become hostile. In any case, if you borrow, it is always very difficult to repay.
Loan shark risks
There are many risks you expose yourself to when you borrow from them. The major risks are that they lend at a very high interest rate. Rates are multiple times more than the official or legal lending rate.
If you fail to pay, they are going to adopt unconventional means to get their money from you. Some of them can even apply brute force to get the money from you. Furthermore, because of the pressure, you will be into, you can be forced to borrow more to repay the loan. You will be in multiple debts.
You must avoid loan sharks. It may be difficult to spot them. If you have a lender who is prepared to offer little or no paperwork like credit agreement, or who does not demand a record of payment, you should beware of such lenders because they could be loan sharks.
Moreover, any lender that refuses to disclose the interest rates of the loans they offer should be avoided because such a lender could be a loan shark.
Any lender that demands such items like your passports, or driving licenses and bank cards as securities must be avoided because they are loan sharks.
Loan sharks are known to increase the debt, and they can increase their charges at any time. Sometimes they make it extremely difficult for you to pay your loans. These are some of the signs that such a person is a loan shark.
Before you borrow from a lender, you have to check whether they are authorized to be lending money. You can approach the Financial Conduct Authority (FCA). They keep information about any authorized moneylender. If the name of such a lender is not there, then such a person must be a loan shark. You should not borrow from unauthorized lenders, and do not allow them to come to your home.
Does the law recognize loan sharks?
These lenders will always resort to violence and intimidation to get their money; the law does not recognize them. Even if the law recognizes them, they are not beyond the law. Any lender who harasses you is breaking the law.
It is common for such people to threaten you with a prosecution. This cannot happen because unauthorized lenders cannot resort to the law to recover the debt. They do not have any legal right to make the borrower to pay the loan. This is because the loan is illegal.
The best thing to do is to contact law enforcement such as the police if you are threatened by the loan sharks or other unauthorized lenders.
Loan sharks are real!
and if you allow them, they can wreck your life. They can even ruin your profession. They are not out to help you, rather, they are ready to exploit your financial predicament. They make things extremely difficult for those in financial stress.
Usually, it is not easy for those who resort to these lenders to get money through the traditional lending channels. It could be because they had very bad credit. The nature of the debts they incurred in the past can make them unable to get that loan.
If you want to borrow, it is important that you understand the interest rate at which you are borrowing. If the lender is giving you at a very high rate, as is the case with the loan shark, it will be extremely difficult for you to repay. The condition is only favorable to these sharks, but it is very bad for the borrower. These lenders will always keep you in debt and they will make life very unbearable. Because of the unfavorable lending condition, they will keep you dependent for a long time.
Legal loan sharks
These days they offer their loans in different names. They disguise their names to look, genuine lenders. Some of them now go by the name cash advance companies, or payday cash lenders and payday loan and so on. They are the same thing. They are characterized by one thing and that is exorbitant interest rates before they can dispense the quick cash. These modern lenders are technically legal, but many of those who passed through that experience will describe them as loan sharks because of the harsh conditions they dispense such loans.
Modern loan sharks will make life uncomfortable until you pay your debt. It is possible that they visit your home and they can even come to your place of work thereby putting your job in jeopardy. These tactics can work for these lenders, but it will be extremely difficult for the borrowers.
The best way to free yourself from these dangerous lenders is to avoid them. Ensure that you borrow from reputable and regulated lenders.