Because of the CoVid-19 pandemic, a lot of people lost their jobs and livelihood. A lot of people are struggling with their finances and are looking for ways to get a loan.
Unfortunately, there are individuals or groups of people taking advantage of this situation.
They are called Loan Sharks.
They know people are desperate. They know people are looking for a fast and easy source of cash. They may seem friendly and helpful at first, but what you don’t know is that you’re falling into their trap.
A trap that could be an unending cycle of debt payment has caused nothing but pain and misery.
Don’t fall into these kinds of traps. Here is everything you need to know about loan sharks
What is a loan shark?
A loan shark is an unlicensed individual or group of people that illegally lend people money. They usually charge a ridiculously high-interest rate. They can go to 20% or higher.
Loan sharks often use manipulation, threats, blackmail, and violence to collect money from their victims. Loan sharks are often connected to a crime syndicate.
Loan sharks are predatory lenders. They usually target desperate people, gambling addicts, drug addicts, and desperate families. They use a person’s weakness or addiction to milk them money.
Are loan sharks illegal/criminals?
Loan sharks are usually connected to other organized crime groups. These groups are in the business of illegally lending someone money for profit.
What do loan sharks do?
Loan sharks lend quick money to people.
No questions asked, no messy paperwork—fast, easy, and accessible money.
However, loan sharks have a too high and unmanageable interest rate. The interest rate usually goes up to 20% or higher for 30 days.
How to spot a loan shark?
There are a lot of ways to encounter a loan shark. They may appear friendly at first to get your trust. They are masters at manipulation and will say and do everything just to hook you in their scheme.
Here are some ways to spot a potential loan shark.
1. They will show little to no paperwork. They might let you sign some made-up form or an informal loan agreement. But remember, they operate illegally. Most likely, they will use that form to intimidate you.
2. They have no clear terms on the loan or interest rate. They can increase your loan or interest anytime they want. They can charge you with a lot of hidden charges no clear terms are set.
3. They take too much personal information. They may even take your personal belongings or ID as security or collateral. They might ask for a photocopy of your ID, bank details, or driver’s license. They will use this information to intimidate or blackmail you in case you can’t pay. There are stories of loan sharks using social media to shame people online publicly.
4. They increase the interest or add some hidden charges to your debt. They will come up with some made-up reason that they can’t justify increasing your total debt. They will do anything to get the most money from their victims.
5. They are master manipulators. They will sweet talk you to unfair terms and do anything to gain an unfair advantage. They might sweet talk you to giving your car, house, expensive phone, or luxury items like jewelry as collateral. They are expecting their victims will be unable to pay the loan. That’s why they will ask for unfair collaterals.
6. They are offering a too-good-to-be-true deal. If they are offering or approving a fast, no questions asked loan that seems too good to be true, then it probably is. You’ll never know what kind of hidden charges they’ll be adding to your loan.
Is it ok to borrow from a loan shark?
Loan sharks are predatory. They will milk money from you in any way possible.
Where loan sharks operate
Loan sharks can be found anywhere.
Casinos They prey on losing gamblers running low. They offer money to speculators hoping to win back their money lost. They are usually working with dealers and managers. They take expensive items like cars, watches, phones, properties as collateral. Dealers and managers get a commission for every referral they make to the loan shark.
Personal Network A friend, friend of a friend, relative, or colleague, may introduce you to a loan shark. They may also be a loan shark victim looking for referrals to defer payment or earn commissions from the loan shark.
Believe it or not, loan sharks use ads to entice potential victims. It may be a simple flyer posing as a licensed moneylender to a Facebook post or ad. All transactions are made online, and you won’t even meet the loan shark.
Loan sharks are adapting and getting creative on how to get more victims.
What happens if you fail to pay
Loan sharks will not hesitate to use threats, intimidation, and violence to get their money.
They often threaten to report their victims to the authorities.
They will take advantage of a person’s ignorance to get what they want. But, remember, they are an illegitimate business and what they’re doing is illegal.
They can’t report you and take you to court. All they can do is scare you.
But, they can and probably will resort to intimidation, blackmail, and violence.
Better alternatives to loan sharks
If you’re looking to borrow money, it is best to borrow from a legitimate source.
Banks Bank loans are safe loans to get. It will also help with your credit rating. Interest rates are also manageable. You can’t go wrong with bank loans.
Family You could try asking your family and relatives if they have money to spare. Just make sure the terms like interest and payment plans are clear.
Most importantly, pay them. They are doing you a huge favor.
Licensed moneylender There are a lot of licensed yishun money lender that give personal loans with low-interest rates. They can release funds in as fast as 30 minutes. Just be sure that you’re borrowing from a legitimate and licensed moneylender. A licensed lender like the lucky plaza money lender is not allowed by the Ministry of Law(MinLaw) to advertise their services.