Fintopi
    Facebook Twitter Instagram
    Fintopi
    • All About Loans
    • Personal Loans
    • Auto Loans
      • Student Loans
      • Payday Loans
      • Auto Loans
    Fintopi
    Home » Loan Sharks Explained
    How Do Loan Sharks Work?
    All About Loans
    FinTopiAuthorBy FinTopiAuthorJanuary 11, 2023Updated:January 25, 2023No Comments7 Mins Read

    Loan Sharks Explained

    Loan sharks are a growing problem, especially in the United States. They take advantage of vulnerable borrowers by providing quick cash with extremely high-interest rates and then use fear tactics to ensure repayment. But what exactly are loan sharks? How do they work and why do they exist? Here we’ll cover not only this but much more you need to be aware of.   

    We’ll start by looking at the definition of loan sharks and what makes them different from other lenders. So, shark lenders are those offering short-term, high-interest loans with little to no regard for the borrower’s ability to repay. This can lead to a cycle of debt that is difficult to break free from.  

    The loan shark often operates outside of the law, which makes it difficult for borrowers to seek help when things go wrong.  

    If you’re considering borrowing from a loan shark, make sure you understand all of the terms and conditions. Be sure to also ask questions if anything is unclear. And most importantly, only borrow an amount that you know you can repay.   

    In continuation, we will further discuss the various tactics they use to trap borrowers in cycles of debt, as well as the legal consequences of borrowing money from loan shark lenders. 

    Table of Contents

    • What Exactly Are Loan Sharks?
    • How Do Loan Sharks Work?
    • Why You Should Avoid Loan Sharks
    • How to Avoid Loan Sharks
    • What to Do If You Owe Loan Shark Money?
    • Conclusion

    What Exactly Are Loan Sharks?

    Loan sharks are people who lend money at extremely high-interest rates, often without following any legal regulations. They’re often willing to lend to people with bad credit or those who can’t get a loan from a traditional lender.  

    These extremely high fees and interest rates make it difficult for borrowers to repay the loan but many people still decide to do so especially when they are in desperate need of money.  

    If you’re thinking about borrowing money from a loan shark because you can’t qualify elsewhere, it’s important you take time to understand the ins and outs of the whole process. 

    By doing so, the chances of paying back much more than you borrowed or putting yourself in financial jeopardy will be much lower.   

    How Do Loan Sharks Work?

    Now that we answered what a loan shark is, let’s take a look at how it works.  

    Loan sharks typically target people who are in need of quick cash and have few other options for borrowing. They may advertise their services online or in local newspapers, or word-of-mouth may bring borrowers to them.  

    Once a borrower agrees to take out a loan from a loan shark, they will typically be required to sign over a post-dated check for the full amount of the loan plus interest. The loan shark will then hold onto this check and cash it on the agreed-upon date. This leaves the borrower without the funds to repay the loan and often puts them at risk of bounced checks or late fees from their bank.  

    To give the borrowed money back, borrowers must either take out another loan (often from another loan shark) or find some other way to come up with the cash. This can start a dangerous cycle of debt that is difficult to break free from.  

    While we suggest you avoid getting a loan from a loan shark altogether, in case that’s not possible in your case, try to be as aware of their tactics as possible.

    Why You Should Avoid Loan Sharks

    There are many reasons why you should avoid loan sharks. The first one is that they are illegal moneylenders who often charge extremely high interest in order to secure large profits for themselves.   

    Shark lenders can be very dangerous, and their activities can lead to violence and other criminal activity. If you need a loan, it is best to avoid loan sharks and seek out a reputable lender. Even if your score is in a poor range, there may still be some lenders willing to work with you, if you just dedicate some time to finding them.  

    Loan sharks do not follow any of the laws and regulations that protect consumers from unfair practices. They are also renowned for making threats when borrowers cannot make payments.  

    In addition, loan sharks target people who have bad credit or no credit history, leaving them vulnerable to high-interest rates and difficult payment terms. You should never get head over heels if some lender is desperate to lend money to you or just trying to pass this whole thing as if they are doing you a big favor that you just cannot decline.  

    If getting a loan from a loan shark is your last resort and only option, there are ways to be smart about it. Take a look at your monthly budget and after you factor in all of the necessary expenses, is there any money left for the loan repayment? One other thing you can try to do is negotiate with a loan shark. Remember that their end goal is to lend you money so they may be open to lowering their interest rates a bit.  

    How to Avoid Loan Sharks

    There are a few things you can do to avoid loan sharks. First, be aware of what they are and how they work. So, anytime a lender is trying to lend you money at extremely high-interest rates and operating without proper licenses you can at least suspect they are shark lenders.   

    Second, don’t borrow money from someone you don’t know or trust. If you’re in a bind and need cash, go to a reputable source like a bank or credit union as there is still a chance of finding a lender that specializes in lending money to individuals with bad credit.  

    Third, be careful of online lenders. Many of these companies are legitimate, but there are some that are not. Be sure to research any company or individual before you borrow from them.  

    Fourth, if you’re contacted by a loan shark, don’t engage with them. Just hang up the phone or delete the email. Don’t give them any information about yourself or your finances.  

    What to Do If You Owe Loan Shark Money?

    Someone who has taken out a loan from a loan shark may be paying back up to 10 times the amount that was originally borrowed. This can make it very difficult to repay the debt, especially if you are on a low income.  

    So, if you owe money to a loan shark, the first step you should take is to try and repay the debt as soon as possible. And in case you cannot do that, you should contact the police or your local Trading Standards office.  

    Remember that loan sharks are illegal moneylenders and they often will start to threaten you or your family once you are late with the payments. They may also damage your property or even try to hurt you physically. This surely is a matter that should be taken seriously, so don’t hesitate and contact local authorities immediately. You can also call the 24-hour National Loan Shark Helpline on 0300 555 2222 for advice and support.

    Conclusion

    Loan sharks are an unfortunate reality of the modern world, and it’s important to understand what they mean, how they work, and why you should stay away from them.  

    It’s also crucial to remember that they can be dangerous and not stop on just the threats if you have trouble paying them back. There are ways out of the difficult financial situation and you don’t have to resort to loan sharks when you can get help elsewhere.   

    Always do your research before committing to any type of loan or borrowing agreement so that you know exactly what kind of risks you’re taking on. Also, make sure you are getting fair rates and not getting targeted by a shark lender.

    Auto Loans By State
    ‎Home Equity Loans By States
    ‎Mortgages By States
    ‎Personal Loans By State
    ‎Student Loans By State
    Auto Loans By State
    AL
    AK
    AS
    AZ
    AR
    CA
    CO
    CT
    DE
    DC
    FL
    GA
    GU
    HI
    ID
    IL
    IN
    IA
    KS
    KY
    LA
    ME
    MD
    MA
    MI
    MN
    MS
    MO
    MT
    NE
    NV
    NH
    NJ
    NM
    NY
    NC
    ND
    MP
    OH
    OK
    OR
    PA
    PR
    RI
    SC
    SD
    TN
    TX
    UT
    VT
    VI
    VA
    WA
    WV
    WI
    WY
    ‎Home Equity Loans By States
    CA
    CO
    CT
    DE
    DC
    FL
    GA
    HI
    ID
    IL
    IN
    IA
    KS
    KY
    LA
    ME
    MD
    MA
    MI
    MN
    MS
    MO
    MT
    NE
    NV
    NJ
    NM
    NC
    ND
    OH
    OR
    PA
    RI
    SC
    SD
    TN
    UT
    VA
    WA
    WI
    WY
    ‎Mortgages By States
    CA
    CO
    CT
    DE
    DC
    FL
    GA
    HI
    ID
    IL
    IN
    IA
    KS
    KY
    LA
    ME
    MD
    MA
    MI
    MN
    MS
    MO
    MT
    NE
    NV
    NJ
    NM
    NC
    ND
    OH
    OR
    PA
    RI
    SC
    SD
    TN
    UT
    VA
    WA
    WI
    WY
    ‎Personal Loans By State
    CA
    CO
    CT
    DE
    DC
    FL
    GA
    HI
    ID
    IL
    IN
    IA
    KS
    KY
    LA
    ME
    MD
    MA
    MI
    MN
    MS
    MO
    MT
    NE
    NV
    NJ
    NM
    NC
    ND
    OH
    OR
    PA
    RI
    SC
    SD
    TN
    UT
    VA
    WA
    WI
    WY
    ‎Student Loans By State
    CA
    CO
    CT
    DE
    DC
    FL
    GA
    HI
    ID
    IL
    IN
    IA
    KS
    KY
    LA
    ME
    MD
    MA
    MI
    MN
    MS
    MO
    MT
    NE
    NV
    NJ
    NM
    NC
    ND
    OH
    OR
    PA
    RI
    SC
    SD
    TN
    UT
    VA
    WA
    WI
    WY
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    FinTopiAuthor
    • Facebook
    • Twitter
    • LinkedIn

    The FinTopiAuthor, who prefers to remain anonymous for now due to privacy reasons, has a bachelor’s degree in finance and over 10 years of experience in financial planning and bank loans. For the last 3 years, they’ve been working as a freelance copywriter in the niche of financial products, investing, and money lending, with the special attention to pros and cons of different loan types. Besides an interest in financial topics, they’re keen on traveling and various adventures.

    Related Posts

    ‎Auto Loans In West Virginia

    January 27, 2023

    ‎Auto Loans In Virgin Islands

    January 27, 2023

    ‎Auto Loans In Vermont

    January 27, 2023

    ‎Auto Loans In Texas

    January 27, 2023
    Add A Comment
    Leave A Reply Cancel Reply

    Table of Contents

    Table of Contents

    Table of Contents

    • What Exactly Are Loan Sharks?
    • How Do Loan Sharks Work?
    • Why You Should Avoid Loan Sharks
    • How to Avoid Loan Sharks
    • What to Do If You Owe Loan Shark Money?
    • Conclusion

    You Lost Money?

    Get Your Money Back

    Show Loans by state

    Loans by state

    AK
    AL
    AR
    AS
    AZ
    CA
    CO
    CT
    DC
    DE
    FL
    GA
    GU
    HI
    IA
    ID
    IL
    IN
    KS
    KY
    LA
    MA
    MD
    ME
    MI
    MN
    MO
    MP
    MS
    MT
    NC
    ND
    NE
    NH
    NJ
    NM
    NV
    NY
    OH
    OK
    OR
    PA
    PR
    RI
    SC
    SD
    TN
    TX
    UT
    VA
    VI
    VT
    WA
    WI
    WV
    WY

    Copyright © 2022-2023 Fintopi. All trademarks are the property of their respective owners.

    Facebook Twitter Instagram LinkedIn WhatsApp

    What's Hot

    What You Need to Know Before Choosing the Right APR for a New or Existing Credit Card
    March 20, 2023
    What is the Debt Avalanche Method and How Does It Work?
    March 20, 2023
    Factors to Consider Before Applying for an Emergency Loan
    March 20, 2023
    Payday Loan vs. Personal Loan: Which is the Best Option?
    March 19, 2023

    Categories

    • All About Loans
    • Auto Loans
    • Auto Loans By State
    • ‎Home Equity Loans By States
    • ‎Loans By States
    • ‎Mortgages By States
    • Payday Loans
    • Personal Loans
    • ‎Personal Loans By State
    • Student Loans
    • ‎Student Loans By State

    Company

    • Homepage
    • News
    • Our team
    • Our mission
    • Terms of use
    • Privacy Policy
    Disclaimer: We do our best to ensure that the information on our site is up to date and accurate. This information may differ from what you see on the websites of the companies we mention. All products and services are provided without warranty of any kind. When evaluating offers, you should check the terms and conditions of the product and/or company and/or company. Trademarks, product names, logos and others mentioned on Fintopi are the property of their respective owners. The information we present is for educational purposes only and you should consult with a licensed financial professional before making any financial decisions.

    Type above and press Enter to search. Press Esc to cancel.