Loan sharks are unscrupulous money lenders whose goal is to take advantage of people having financial difficulties in order to make money for themselves. They usually target people in low income brackets and those who are desperate for money, particularly those with inferior credit rating.
Typically, loan sharks are easily approachable, in fact, they may even approach you. But it’s never a good idea to borrow from a loan shark, because the repayments are insanely high, and they sometimes even resort to violent activities to collect repayments from you.
The following signs will help you spot a loan shark quickly:
Tell Tale Signs that the Lender is a Loan Shark
- No license or other necessary paperwork can be presented
- There’s no credit agreement and your payments are not recorded
- Your debts are increased without your permission
- You are not allowed to settle your debts, or you are forced to borrow from them again
- You are not given information about your debt’s interest date and the outstanding amount that you owe
- They will take your possessions as security
- They will resort to verbal or even physical violence if you cannot make your repayments
How to Protect Yourself from Loan Sharks
Avoid Borrowing on a Rush
Loan sharks target those whose need for money is desperate, so don’t make yourself vulnerable. While financial emergencies may occur, you can still find other means to access fast cash during desperate times. Start by building your emergency fund. While you sure would never hope for the need to use it someday, it always pays to have one handy in an instant access account. If you don’t have the cash to spare, make sure you at least have a credit card to take over. While we certainly don’t recommend making cash advances through your plastics, they are way better than dealing with a loan shark.
Improve Your Credit Rating
Loan sharks will always entice you to borrow from them because they don’t perform any credit checks, something that borrowers with poor credit dread. However, you should keep in mind the high price to pay for borrowing from a loan shark, and you definitely won’t be pleased. In fact, the market has significantly expanded to accommodate the needs of those with imperfect credit. Alternative forms of borrowing such as payday and logbook loans have risen to cater to borrowers with special needs. Again, while not the best form of borrowing, they are still a better choice than a loan shark.
Check with the FCA
Loan sharks are not FCA (Financial Conduct Authority) accredited and they work illegally, thus leaving you with very little protection after coming into agreements with them. FCA keeps a record of all the licensed lenders in the country, as well as those whose licenses were revoked or suspended for whatever reason. If a lender is not listed with the FCA, never borrow or make any deals with them.