Loan sharks often target individuals with steady and respectable jobs and therefore, a reputation to protect. This gives them a sort of leverage to use as they pursuing their money to be repaid. This is because the loan agreements they enter with borrowers are not legally enforceable. Upon your default, they will resort to practices such as; blackmails, threats to embarrass you, complaining to your employer, sending agents to your home to embarrass you loudly among other acts.
Don’t Borrow from Loans Sharks
Compared to banks and other legitimate lenders, loan sharks charge exorbitantly high interest rates. They normally compute interest rates per week as opposed to the banks’ annual rates. For instance, an amount x charged 5% weekly interest translates to 20% each month and 260% annual interest!
Loan sharks use confusing terms and conditions on loans agreement. For instance, the weekly interest rate placed on the agreement may appear okay but they may translate into a rate 10 to 20 times higher than that of conventional borrowing.
They design hard-to-repay loans, placing the borrower on an interest-only paying spiral. This will trap you in a vicious impoverishing debt cycle.
Though you may find yourself pressed up to a point of being crushed under the weight of financial demands, shun the loan sharks. You will only end up between their jaws and true to their name, they will literally eat you up. Develop the discipline of safe borrowing! There are many pains associated with borrowing from loan sharks, yet the path leading to their premises is heavily trended. This article explores how loan sharks operate and offers advice to those considering paying them a visit.
Who is a Loan Shark?
A loan shark is a person who lends money at absurdly high-interest rates to clients who due to various circumstances are unable to access money through conventional borrowing. Apart from charging high interest rates, loan sharks often charge other fees at their fancies and whims. They also apply very unconventional means to collect their loans, which may include threats, blackmail, and violence.
Why do people visit Loan Sharks?
There are myriad reasons why people visit loan sharks. When people experience unusual financial strains, they often rush to anyone ready to advance them credit speedily, and without the usual tedious formalities of formal lending institutions. Loan sharks conveniently fit this bill.
Banks and other legal financial institutions restrict the minimum amount you can borrow as a loan. Irrespective of the amount, banks will take you through a strenuous and lengthy process and demand from you a bunch of documents. Many people consider this entire process not worth the effort. Loan sharks come in therefore as providers of easily accessible loans.
Operations of Loan Sharks
Loan sharks take advantage of your desperation to advance you loans while trapping you with unreasonable interest rates. They charge smaller loans comparatively higher interest rates than bigger loans. This is primarily because of ‘sharking’ cost, which they consider constant regardless of the loan amount.
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