With all the troubles associated with loan sharks, it is amazing that they have so many clients. This article sheds light on loan sharking and offers advice to would-be borrowers.
Who are Loan Sharks?
A loan shark is an individual or an entity that advances outrageously high interest rates. The advanced loan has very strict terms of repayment. Loan sharks often use threats of violence and at times actual violence when clients delay or default to pay.
Why go to Loan Sharks?
Reasons abound why people visit loan sharks. Some people find themselves at the loan sharks door, compelled by circumstances beyond their control. This may include genuine emergencies such as of a medical nature. Other reasons may include; loss of income, loss of employment, divorce, lack of health insurance, prolonged illness, and death in the family.
Many a time though, it is due to convenience, ease, and speed of getting the loans that drive people to loan sharks. Loan sharks lending criteria are lenient without the strictness borrowers face from the mainstream lenders. Individuals with low credit scores and those who for various reasons cannot access quick loans from conventional lenders often find loan sharks a tempting alternative.
A section of borrowers, however, goes to loan sharks because they have poor personal financial management. Others are just gullible and discover the nightmare they entered into too late.
How Loan Sharks Operate
Loan Sharking is illegal. Since borrowers are not legally bound to repay the advanced loans, loan sharks result to unorthodox means of using threats, violence, and other illegal practices in collecting what they have rent out. To guarantee repayment, some loan sharks even confiscate original personal documents such as passports, identity cards among others. Their illegal nature of the business also means they have no legal recourse when clients default. It is partly due to this that they charge the extremely high interest rates, to caution themselves against default.
Loan sharks often take a predatory stance and stalk uninformed senior citizens with promises of “instant cheap loans”, given “without credit check”. They also stalk other categories of desperate persons in short of cash such as temporary workers, minorities, and deep in debt low-income borrowers among other vulnerable groups.
Why You Should Avoid Borrowing from Loans Sharks
One major reason for avoiding these loans is the high interest rates charged. Lenders also attach very high penalty fees on late payments. Loan sharks also give very short repayment terms, in addition to using coercion and blackmail, which effectively makes many borrowers be under heavy stress and pressure struggling to meet repayment deadlines.
Conclusion
The joy of loans from sharks is very short-lived. Often, borrowers remember most, the pains associated with repaying these types of loans. It is better to avoid loan sharks altogether and do the best you can to use licensed and reputable lenders that offer reasonable borrowing rates.
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