The pandemic has resulted in a global financial crisis and, unfortunately, a lot of people lost their jobs and the source of income. The difficult financial situation makes people look for options to get money as quickly as possible. And this is exactly what the loan sharks need.
Many people were left without permanent earnings, and this is a favorable condition for lenders, including dishonest ones. Probably this is one of the industries that gets super profits in a pandemic. But this is not the best solution for those who have no money! In this article, you will find out who the loan sharks are, how they work, and how you can avoid cooperation with them.
Loan Sharks: Who They Are and How They Work
Unfortunately, the lack of money often deprives people of common sense and reasonable thinking. They try to find a solution to the situation quickly and easily agreeing to the illegal, dishonest, and predatory lending terms offered by the loan sharks. If you still don’t know who they are, then you are very lucky, and below you will find out why. Let’s take a look at the specifics of these organizations, and the reasons you should never deal with them.
It is a person/organization that offers to borrow money at very high-interest rates. They can give you cash the same day you contact them. But this is where all the benefits of such cooperation end. If you do not return the money on time (and this is almost unrealistic for those who have a difficult financial situation, since the interest rate can reach 50% in 10 days), you will soon run into even worse problems. These organizations often use violence to collect debts. That is why they are nicknamed sharks and usually, these lenders are members of criminal gangs.
How Do Such Organizations Work?
Finding such organizations is not difficult. Their offices can be found both in poor areas and on the Internet. What is more, in big cities, the offices of these organizations can be located almost in the center of the city, creating the illusion of legal business. The emergence of such organizations on the Internet has only increased the popularity of sharks and more and more people are caught on their hook. These organizations are not regulated by the government.
The financial sources of such organizations are very difficult to trace, they work for personal businesses or are even unregistered organizations. Almost everyone knows and understands this, but the fact that such “organizations” do not require credit reports and biography only increases the demand for their services. If we also take into account the crisis that is associated with the global pandemic, then this year is the peak of activity for loan sharks.
By the way, deals with such lenders are illegal, so when it comes to resolving the situation of debt repayment, it is very difficult to find a solution. The main goal of such organizations is to obtain super-profits in a short time. For instance, a person borrows $5,000, then he will have to return $10,000 within 30 days. Some people are satisfied with such conditions, but in practice, loan sharks begin to demand much more money. They may even charge an additional interest rate and use both psychological pressure and physical violence to get money.
But not everyone who needs money in debt suspects that they will face the above situation. Therefore, it is vital to talk about the ways to recognize loan sharks.
How to Understand That It Is a Loan Shark
Fortunately, it is very easy to recognize an unscrupulous lender. This may be evidenced by the following conditions:
- At the first meeting, it can be very difficult to understand that there is a predatory lender in front of you. Often these “specialists” have knowledge of psychology and methods of influence. They may communicate politely and friendly, trying to prove that they want to help you. But in reality, you will not be provided with any real information regarding the deal. They will insist that this is your chance to get money without the lengthy procedures that banks offer, and cooperation with their company will give you pure benefits.
- Loan sharks will not require a lot of information about you, except for an ID card, phone number, and place of residence. That is, you will be offered to receive money without reviewing your credit history and other biographical information. Also, you will not receive the contract that lenders usually provide. That is, in case of problems, you will not be able to prove that you borrowed the money.
- You will not get a clear explanation of the lending rates. This will allow them to raise interest rates and the amount of debt as they wish. To do this, they won’t even notify their customers about the rate hike.
- They don’t have direct advertising. Even though today many sites offer to borrow money. These sites can quickly disappear, and organizations will appear under new names on other sites. As for offline offices, they will not distribute direct advertising. They may share flyers that are handed out on the streets or even learn about offices by the word of mouth. For example, a bartender in a local bar casually talks about the fact that on the next street, you can profitably take out a loan, and so on. Therefore, when someone from your acquaintances recommended something similar to you, then you should carefully check whether they are not loan sharks.
- You may be asked to guarantee that you will return the loan. As collateral, they may ask you to leave them jewelry, gadgets, car, and even documents. Therefore, this is an alarm that should refuse their services.
- It is impossible to find credible reviews of the company’s activities. If you try to find reviews about a company on the Internet, most likely you will not find any information about their activities. Some companies may pay for positive reviews, but this is extremely rare. All of this is because they often change their names to make them difficult to track.
If you come across at least one of the points listed above, then you shouldn’t sign a deal. You should understand that it is a loan shark company in front of you. They do not want to help you but only to cash in on your difficult situation.
How to Avoid Dealing with Loan Sharks?
It is vital to understand that even in the most desperate situations, you should not make a deal with such companies. Yes, you will receive money quickly, but then you will give back (or lose) much more than you’ve received. So, if you are in need of money, you should deal with legal lenders only. Here are the tips to find them.
- Try to find information regarding the official registration of the company. You can try to search for this information on the Internet or contact your local authorities to inquire about legal company registration.
- Require an agreement in which clear lending rates will be specified. Pay attention to all the nuances in the contract, read about whether the amount is fixed. There should be a clear sum you should pay back after the contract expiration date.
- Never sign a contract if you do not understand what it is about. If you do not understand something about the rates and the final amount of debt, then you run the risk of getting the outcome faced by those who cooperate with loan sharks.
- You must have a loan agreement on hand. If you are not provided with any documentation, then in the event of disputes, you will not be able to prove anything in the court.
- Legal companies will never ask you to leave anything as collateral. This is especially true for documents. Also, never leave your documents.
What Else Can You Do to Avoid Loan Sharks?
- If you are faced with a situation where you really need money, we strongly recommend that you contact the bank and ask about the ways to get a loan. Remember that legal companies offer loans at lending rates that do not exceed the rates established by law. Consult about all the possibilities that may help you solve the problem. Visit several legal lender firms or credit unions. At least cooperation with the latter will not bring you such problems as loan sharks.
- Find an additional source of income. If your job does not bring you prosperity, then consider finding a new job. Today, most companies have gone online, and perhaps you can find a part-time job that will give you additional income.
- Save 10-15% every time you get paid. This amount will not become critical in relation to the total salary, but after a while, you will be able to accumulate an impressive amount. The main thing is to convince yourself not to spend this money without an emergency.
Now you are fully armed and know how to recognize loan sharks. Remember that such organizations do not want to help you, but only want to leave you penniless. Of course, many are attracted by the fact that they can lend money right away, but as a result, people are forced to pay back at least double what was borrowed. Also, remember that cooperation with such “specialists” endangers your health and even the health of your loved ones. These people are supported by criminal groups and often by the police in countries with high levels of corruption. Look for legal alternatives so as not to worsen your situation even more!